diff --git a/parsed_sections/prospectus_summary/2013/AXR_amrep-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/AXR_amrep-corp_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2013/BFAM_bright_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/BFAM_bright_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/BGSF_bgsf-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/BGSF_bgsf-inc_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained in other parts of this prospectus. Because it is a summary, it does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should read the entire prospectus carefully, including our consolidated financial statements and the related notes included in this prospectus and the information set forth under the headings "Risk Factors," "Cautionary Note Regarding Forward-Looking Statements" and "Management s Discussion and Analysis of Financial Condition and Results of Operations." As used in this prospectus, unless the context otherwise indicates, the references to "BG Staffing," "we," "our," or "us" refer to LTN Acquisition, LLC, together with its subsidiaries (including LTN Staffing, LLC), prior to the merger of LTN Acquisition, LLC with and into LTN Staffing, LLC and the subsequent conversion of the surviving limited liability company into a Delaware corporation, and BG Staffing, Inc. and its consolidated subsidiaries on or after such merger and conversion (the merger took place on November 1, 2013, and the conversion took place on November 3, 2013). Unless otherwise indicated or the context otherwise requires, financial and operating data in this prospectus reflects the consolidated business and operations of LTN Staffing, LLC and its wholly-owned subsidiaries prior to such merger and conversion, and BG Staffing, Inc. and its wholly-owned subsidiaries after such merger and conversion. LTN Acquisition, LLC had no operations; thus, the financial statements of this entity have not been included in this registration statement. Our Company We are a national, temporary staffing company that provides temporary workers to a variety of customers that are seeking to match their workforce requirements to their business needs. We have 27 branch offices in 10 states within the U.S. Our Industry The temporary staffing industry supplies temporary staffing services to customers to help them minimize the cost and effort of workforce planning. These services also enable the customer to rapidly respond to changes in business conditions, and in some cases to convert fixed labor costs to variable costs. Temporary staffing companies act as intermediaries in matching available temporary workers to customer assignments. The demand for a flexible workforce continues to grow with competitive and economic pressures to reduce costs and respond to changing market conditions. Staffing Industry Analysts ("SIA"), an independent staffing industry organization, is projecting growth of 6% in the U.S. staffing industry in 2013, driven by continuing job creation and the continued upward shift in temporary staffing usage. The temporary staffing market is subject to volatility based on overall economic conditions. Historically, in periods of economic growth, the number of companies providing temporary staffing services has increased due to low barriers to entry. During recessionary periods, the number of companies has decreased through consolidation, bankruptcies or other events. The temporary staffing industry is experiencing increased demand in relation to total job growth as customers have placed a greater priority on maintaining a more flexible workforce. The temporary staffing industry is large and highly fragmented with many competing companies. Staffing companies compete both to recruit and retain a supply of temporary workers and to attract and retain customers to use these workers. Customer demand for temporary staffing services is dependent on the overall strength of the labor market and trends toward greater workforce flexibility. The temporary staffing industry includes a number of markets focusing on business needs that vary widely in duration of assignment and level of technical specialization. We have diversified our operation to provide temporary workers within distinct segments of the industry. We refer to these segments as Light Industrial, Multifamily and IT Staffing. Light Industrial Segment Our Light Industrial segment provides temporary workers to primarily manufacturing customers needing a flexible workforce. We currently have offices in Sulphur Springs, Texas, Corsicana, Texas, Greenville, Texas, Gainesville, Texas, El Paso, Texas, Plano, Texas, Mesquite, Texas, Austin, Texas, Dallas, Texas, Olive Branch, Mississippi, Southaven, Mississippi, Waukegan, Illinois and Milwaukee, Wisconsin. Light Industrial segment revenues were $39.3 million in the fiscal year ended December 30, 2012 ("Fiscal 2012") and represented 51.2% of our consolidated revenues. Our Light Industrial segment temporary workers perform services in a variety of manual and unskilled positions. The workers we assign to our Light Industrial customers are our temporary workers, although our customers provide on-the-job direction, control and supervision. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company (Do not check if a smaller reporting company) Calculation of Registration Fee Title of Each Class of Securities to Be Registered Amount to Be Registered(1) Proposed Maximum Offering Price per Share(2) Proposed Maximum Aggregate Offering Price(2) Amount of Registration Fee Common Stock, par value $0.01 per share 1,541,470 $ 0.01 $ 15,414.70 $ 1.99 (1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, the number of shares of common stock registered hereby is subject to adjustment to prevent dilution resulting from stock splits, stock dividends or similar transactions. The amount registered includes 1,541,470 shares of common stock that were issued in connection with the reorganization described in this registration statement and upon the exercise of warrants. (2) No market presently exists of our common stock. The selling stockholders will be required to offer their shares at $0.01 per share until our common stock is listed for quotation on the OTC Bulletin Board or OTCQB marketplace. Assuming such listing is obtained, offers may be made at prevailing market prices or at privately negotiated prices. There is no liquid market for the registrant s common stock. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. * BG Staffing, Inc. is the successor by conversion to LTN Staffing, LLC, d/b/a BG Staffing, which was a Delaware limited liability company. On November 1, 2013, LTN Acquisition, LLC, a Delaware limited liability company and the former parent of LTN Staffing, LLC, merged with and into LTN Staffing, LLC, and the resulting limited liability company converted into a Delaware corporation and was renamed BG Staffing, Inc. on November 3, 2013. Shares of the common stock of BG Staffing, Inc. are being offered by the selling stockholders pursuant to the following prospectus. Except as disclosed in the prospectus, the consolidated financial statements and selected historical consolidated financial data and other financial information included in this registration statement are those of LTN Staffing, LLC and its subsidiaries and do not give effect to such merger or corporate conversion. LTN Acquisition, LLC had no operations; thus, the financial statements of this entity have not been included in this registration statement. Multifamily Segment Our Multifamily segment is a leading provider of front office and maintenance personnel to the multifamily housing industry. We currently have offices in Dallas, Texas; Austin, Texas; San Antonio, Texas; Houston, Texas; Atlanta, Georgia; Phoenix, Arizona; Charlotte, North Carolina; Raleigh, North Carolina; Tampa, Florida; Jacksonville, Florida; and Denver, Colorado. Multifamily segment revenues were $18.2 million in Fiscal 2012 and represented 23.7% of our consolidated revenues. The workers we assign to our Multifamily customers are our temporary workers, although our customers provide on-the-job direction, control and supervision. IT Staffing Segment Our IT Staffing segment provides highly skilled information technology professionals with expertise in SAP ERP, SAP BI, Hyperion, Oracle ERP, Oracle BI and Peoplesoft. Our customers include large Fortune 500 companies (which accounted for approximately 40% of our IT staffing segment revenues in Fiscal 2012), as well as consulting firms engaged in systems integration projects. We operate our national coverage of the market from our offices in Durham, North Carolina and Pawtucket, Rhode Island. IT Staffing segment revenues for Fiscal 2012 were $19.3 million and represented 25.1% of our consolidated revenues. Growth Strategy We are committed to growing our operations. Our growth strategy is reliant upon both acquisitions and organic growth. We will continue to evaluate opportunities utilizing our proven approach to the assessment, valuation, and integration of acquisitions. Additionally, we are committed to continue to grow our operations in our current markets, as well as expand into new markets within the industries that we currently serve. Recent Developments Acquisition of Assets of InStaff Holding Corporation and InStaff Personnel, LLC On May 28, 2013, we acquired substantially all of the assets of InStaff Holding Corporation ("InStaff") and InStaff Personnel, LLC, a wholly owned subsidiary of InStaff Holding Corporation. We believe this acquisition will allow us to strengthen and expand our operations in our Light Industrial segment. We agreed to assume certain liabilities and pay an aggregate of $9 million (subject to a post-closing purchase price adjustment) as consideration for the purchased assets and certain agreements of the sellers and related parties. Contingent earnout payments up to an aggregate of $1 million may also be paid if certain post-closing performance objectives are met. InStaff operated 12 branches in Texas and Mississippi, which we continue to operate under the "InStaff" trade name. InStaff s revenues were $53.5 million in Fiscal 2012. Engagement of Whitley Penn LLP as Our Independent Registered Public Accounting Firm On November 22, 2013, the audit committee of our board of directors decided to dismiss Grant Thornton LLP as our independent registered public accounting firm, effective immediately, and to engage Whitley Penn LLP effective November 25, 2013 as our independent registered public accounting firm. Adoption of 2013 Long-Term Incentive Plan Our board of directors adopted our 2013 Long-Term Incentive Plan (the "2013 Plan") effective December 20, 2013. Our 2013 Plan will provide for the grant of incentive stock options to our employees and any subsidiary corporations employees, and for the grant of nonstatutory stock options, restricted stock, RSUs, stock appreciation rights, performance units and performance shares to our employees, directors and consultants and our parent and subsidiary corporations employees and consultants. See "Executive Compensation—2013 Long-Term Incentive Plan." Conversion into a Delaware Corporation Reorganization BG Staffing, Inc. is the successor by conversion to LTN Staffing, LLC, which was a Delaware limited liability company. LTN Staffing, LLC, which did business as BG Staffing, was organized in Delaware in August, 2007, as a wholly-owned subsidiary of LTN Acquisition, LLC. LTN Acquisition, LLC and LTN Staffing, LLC have effected a reorganization (the "Reorganization") through the merger of LTN Acquisition, LLC with and into LTN Staffing, LLC, with LTN Staffing, LLC continuing as the surviving entity in the merger, and the conversion at LTN Staffing, LLC from a Delaware limited liability company into a Delaware corporation, which is named BG Staffing, Inc. The merger was completed on November 1, 2013, and the conversion was completed on November 3, 2013. LTN Acquisition, LLC had two classes of units of membership interests outstanding (i.e., Class A units and Class B units) which represented a member s interest in LTN Acquisition, LLC. In the merger, each member of LTN Acquisition, LLC received equivalent units in LTN Staffing, LLC as the surviving company in the merger. In the subsequent conversion, which was deemed a "liquidation" of LTN Staffing, LLC under its limited liability company agreement (which was substantially identical to the limited liability company agreement of LTN Acquisition, LLC in place immediately prior to the merger), shares of BG Staffing, Inc. were issued and distributed to the former members of LTN Staffing, LLC as "liquidation proceeds" in amounts determined in accordance with the liquidation provisions of the LTN Staffing, LLC s limited liability company agreement. The shares of common stock of BG Staffing, Inc. issued in the conversion and to be offered by the selling stockholders have rights as further described under "Description of Capital Stock." The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and the selling stockholders are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Prospectus Subject to Completion, dated December 26, 2013 BG Staffing, Inc. 1,541,470 Shares Common Stock This prospectus relates to the offer for sale of an aggregate of 1,541,470 shares of common stock, par value $0.01 per share, of BG Staffing, Inc., which we refer to herein as the common stock, by the selling stockholders named herein. BG Staffing, Inc. is not offering any securities pursuant to this prospectus and will not receive any proceeds from the sale of shares of common stock by the selling stockholders. Our common stock is not presently traded on any market or securities exchange, and we have not applied for listing or quotation on any exchange. We are seeking sponsorship for the trading of our common stock on the OTC Bulletin Board and/or OTCQB marketplace upon the effectiveness of the registration statement of which this prospectus forms a part. The 1,541,470 shares of our common stock can be sold by selling stockholders at a fixed price of $0.01 per share until our shares are quoted on the OTC Bulletin Board and/or OTCQB marketplace and thereafter at prevailing market prices or privately negotiated prices. While a market maker has agreed to file the necessary documents with the Financial Industry Regulatory Authority (referred to herein as FINRA), we cannot provide assurance that our shares will actually be quoted on the OTC Bulletin Board and/or OTCQB marketplace or, if quoted, that a viable public market will materialize or be sustained. Following the effectiveness of the registration statement of which this prospectus forms a part, the sale and distribution of securities offered hereby may be effected in one or more transactions that may take place on the OTC Bulletin Board and/or OTCQB marketplace, including ordinary brokers transactions, privately negotiated transactions or through sales to one or more dealers for resale of such securities as principals, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. Usual and customary or specifically negotiated brokerage fees or commissions may be paid by the selling stockholders. The selling stockholders and intermediaries through whom such securities are sold may be deemed "underwriters" within the meaning of the Securities Act of 1933, as amended, which we refer to in this prospectus as the Securities Act, with respect to the securities offered hereby, and any profits realized or commissions received may be deemed underwriting compensation. We are an "emerging growth company" under the federal securities laws and will be subject to reduced public company reporting requirements. Please read the related disclosure contained in pages 10-11 of this prospectus. Investing in our common stock is highly speculative and involves a significant degree of risk. See "Risk Factors" beginning on page 5 of this prospectus for a discussion of information that should be considered before making a decision to purchase our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2013. Partnership Status of LTN Acquisition, LLC and LTN Staffing, LLC LTN Acquisition, LLC had been reported since its inception as a partnership for federal tax purposes, and LTN Staffing, LLC had reported since its inception as an entity that was disregarded and treated as a branch of LTN Acquisition, LLC for federal tax purposes. LTN Acquisition, LLC and LTN Staffing, LLC continued to maintain their respective status for federal tax purposes until the Reorganization was completed. Consequently, the former members of LTN Acquisition, LLC will pay federal income taxes on LTN Acquisition, LLC s taxable income (or loss) from operations through the day of Reorganization. Historically, LTN Acquisition, LLC had not distributed money to its members; however, immediately prior to the Reorganization, LTN Acquisition, LLC distributed an aggregate amount of $1.2 million to its members as a tax distribution. Members will be responsible for the payment of taxes on their distributive share of LTN Acquisition, LLC s taxable income for the taxable year of LTN Acquisition, LLC that ended immediately prior to the Reorganization, regardless of whether the tax distribution to the Members is sufficient to satisfy their respective tax liability. Corporate Information Our principal executive offices are located at 5000 Legacy Drive, Suite 350, Plano, Texas 75024. Our telephone number at that location is (972) 692-2400. Our website address is www.bgstaffing.com. The reference to our website is a textual reference only. We do not incorporate the information on our website into this prospectus and you should not consider any information on, or that can be accessed through, our website as part of this prospectus. TABLE OF CONTENTS Page Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/BLMN_bloomin_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/BLMN_bloomin_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2013/BXC_bluelinx_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/BXC_bluelinx_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..21a7c09433c85db01bdca01bd8b0cd8704e64781
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+S-1/A Table of Contents TABLE OF CONTENTS About This Prospectus i Cautionary Note Regarding Forward-Looking Statements i Questions And Answers Relating To The Rights Offering iii Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CDW_cdw-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CDW_cdw-corp_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..6fd1b31a26ec10bc1fd1e216e073634da63e7929
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+Prospectus summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0000732412_multiband_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0000732412_multiband_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information from this prospectus and does not contain all the information that is important to you. You should carefully read this prospectus and the documents we have referred you to in "Incorporation of Documents by Reference" and "Where You Can Find More Information" on pages 37 and 38 before making an investment decision. References in this prospectus to "Multiband," "the Company," "we," "us" and "our" refer to Multiband Corporation and its subsidiaries. Overview Multiband Corporation is a Minnesota corporation formed in September 1975 (the Company). The Company has three operating segments: (1) Field Services Segment (FS), where the Company provides installation services for pay television (satellite and broadband cable) providers, internet providers and commercial customers, (2) Multi-Dwelling Unit Segment (MDU), where the Company bills voice, internet and video services to subscribers as owner/operator and also acts as a master system operator for DIRECTV, receiving net cash payments for managing video subscribers through its network of system operators; and (3) Engineering, Energy & Construction Segment (EE&C) where the Company provides engineering and construction services for the wired and wireless telecommunications industry, including public safety networks. This segment also provides renewable energy services including wind and solar applications and other design and construction services, usually done on a project basis. We operate in 33 states with 33 field offices and employ approximately 3,700 people. Field Services Segment (FS) The Company, through its FS segment, generates revenue from the installation and service of DIRECTV video programming for residents of single family homes under a contract with DIRECTV. DIRECTV is the largest provider of satellite television services in the United States with approximately 20 million subscribers. These video subscribers are owned and billed by DIRECTV. The FS segment functions as a fulfillment arm for DIRECTV. As a result, the Company does not directly compete with other providers for DIRECTV s business. Although DIRECTV competes with DISH, the other leading satellite television provider and incumbent providers of phone and telephone services for pay television customers, DIRECTV has its own marketing and competitive programs of which the Company is merely an indirect and passive recipient. The FS segment also provides similar installation services for certain broadband cable and internet providers and commercial customers. Multi-Dwelling Unit Segment (MDU) Through our MDU segment, we serve as a master system operator for DIRECTV, which allows us to offer satellite television services to residents of multi-dwelling units directly and through a network of affiliated operators. The MDU segment also offers bundled services for voice, data and video directly to residents in the MDU market. Our primary customers in the MDU segment are property owners/managers who are focused on delivering their residents (our end users) reliability, quality service, short response times, minimized disruptions and alterations on the property, and value added services. Our contracts with the property owner typically run three to ten years pursuant to right-of-entry agreements between property owners and us. Within this segment, we also offer our internal support center and billing platform to service third party clients. As of December 31, 2012, we had approximately 160,000 owned and managed subscribers, with an additional 36,000 subscribers supported by the support center. Energy, Engineering & Construction Segment (EE&C) The Company also provides engineering and construction services for the wired and wireless telecommunications industry, including public safety networks, renewable energy services including wind and solar applications and other design and construction services which are usually done on a project basis. Our Strategies Our strategies are centered on leveraging our existing infrastructure and improving operational efficiencies. The key elements of our business strategies are: (2)See table in Item 13. Other Expenses of Issuance and Distribution for proceeds, net of out-of-pocket expenses. See "Plan of Distribution" for a description of anticipated expenses to be incurred in connection with our offering and selling the notes. We are not required to sell any specific number or dollar amount of notes in order to accept subscriptions. We will issue the notes in book-entry or uncertificated form. Subject to certain limited exceptions, you will not receive a certificated security or a negotiable instrument that evidences your notes. We will deliver written confirmations to purchasers of the notes. [_________________] will act as trustee for the notes. The date of this Prospectus is _____ __, 2013 Grow Our MDU Business. We believe that we are well positioned with proper funding to support growth initiatives in the MDU market because we are currently the largest nationwide MDU master system operator and we have invested significant time, effort, and capital into developing our MDU infrastructure. Our intent is to substantially grow this segment of our business by targeting middle to high-end rental properties and resort area condominiums. We will target properties that range from 50 to 150 units on a contiguous MDU property for television and internet access only. We will survey properties that exceed 150 units for the feasibility of local and long distance telephone services. Expand Our Installation & Fulfillment Services. We believe our national footprint and technical expertise uniquely position us to expand into new installation and fulfillment services for corporations, government agencies and residential properties. Expanding our installation services would allow us to better leverage our fixed costs and improve operating margins. We continue to evaluate opportunities to expand into new installation services and will pursue those opportunities that are strategically and financially viable. Grow the EE&C Business Segment. We believe growth in public safety networks will continue as security and safety concerns, driven by, among other things, terrorism threats and weather emergencies, require further infrastructure buildouts. We also believe that research, development and investment in alternative and renewable energy sources will provide work for the Company. Improve Operational Efficiencies. We intend to continue efforts to improve our profitability and cash flow by reducing technician turnover, maintaining strict inventory control systems, improving our training and safety programs to reduce insurance and other costs, reducing fleet fuel usage, and optimizing vehicle leasing terms. Pursue Strategic Acquisitions. We intend to pursue strategic acquisitions that expand the scope of our service offerings, allow us to expand our operations into new geographic areas or strengthen our position in our existing geographic markets. See "Business—Pending Acquisition" for more information about a current transaction.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0000741114_isatori_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0000741114_isatori_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0000791770_sqbg-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0000791770_sqbg-inc_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0000791770_sqbg-inc_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0000907686_plures_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0000907686_plures_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..f8571b497d311bf90196ff0fb1a0d80175acb983
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+SUMMARY Introduction The Company is engaged in the development, design and manufacture of innovative MEMS (micro electrical mechanical systems) and Spintronics (magnetic encoding and reading of electron spin) products in its Shrewsbury, Massachusetts fab facility. Our subsidiary, Advanced MicroSensors Corporation ("AMS"), which operates the Shrewsbury fab facility, acquired its assets and business in May 2011 from Advanced MicroSensors, Inc. In our pursuit of products to commercialize, AMS is of strategic importance. AMS has capabilities in MEMS and Spintronics development, and is able to take intellectual property and demonstrate whether the same can be commercialized at a reasonable cost. We seek the licensing of intellectual property. Commercialization of such intellectual property would follow these steps: assessment of the scope of patent claims we hold; assessment of the scope of patent claims held by others; assessment of the market; assessment of the competitive environment; development of a working prototype; and identification of possible licensees, manufacturers and distributors. Based on a determination of cost and value of a particular technology, we may stop the process at an early stage, or continue as far as manufacturing and distribution. Management has identified several initial development projects which would leverage the capabilities of AMS, but has not yet licensed the intellectual property related to the same. The projects are based on MEMS technology which the Company believes AMS can design and manufacture. Our development projects are beginning in 2013 and may take up to two years or more to complete. There can be no assurance of the development and completion of these projects. In April 2012, the Company formed Magnetic Sense Inc., a Delaware Corporation and a wholly-owned subsidiary of the Company, for the purpose of holding and developing the rights to the Company's magnetic sensor technologies. The Company has not had any operating activity in this subsidiary since inception. The Offering The shares of our common stock covered by this prospectus are being registered for resale by the Selling Stockholders, from time to time in transactions (which may include block transactions) on the OTC-QB Bulletin Board (or other markets on which shares of our common stock are then traded), in negotiated transactions, through put or call option transactions relating to the shares, through short sales of shares, or a combination of such methods of sale, at fixed prices which may be changed, at market prices prevailing at the time of sale, or at negotiated prices. To the knowledge of the Company, none of the Selling Stockholders has entered into agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their shares. Selling Stockholders The Selling Stockholders consist of [TO BE COMPLETED IN AMENDMENT NO. 1]. The specific transactions in which these shares were acquired are detailed in the Selling Stockholders section elsewhere in this prospectus. We will receive none of the proceeds from the sale of shares by the Selling Stockholders. Corporate Information Our principal executive office is located at 5297 Parkside Drive, Suite 400, Box 24, Canandaigua, NY 14424, telephone number (585) 905-0554.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0000920465_la-jolla_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0000920465_la-jolla_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..6ec17f66a06e97ba77490f9834b52396c022d30e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0000920465_la-jolla_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following is a summary of some of the information contained in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks relating to our business and common stock discussed under the heading Risk Factors and our financial statements. La Jolla Pharmaceutical Company Our Business La Jolla Pharmaceutical Company is a biopharmaceutical company focused on the discovery, development and commercialization of innovative therapeutics for chronic organ failure and cancer. Our drug development efforts are focused on two product candidates: GCS-100 and LJPC-501. GCS-100 targets the galectin-3 protein, which, when overproduced by the human body, has been associated with chronic organ failure and cancer. In January 2013, we initiated a Phase 1/2 clinical trial with GCS-100 for the treatment of chronic kidney disease, or CKD. The Phase 1 portion of the clinical trial was successfully completed on May 6, 2013. After analysis of the data from the Phase 1/2 clinical study we decided to suspend the Phase 2 portion and expanded it to a three arm randomized 117 patient Phase 2 clinical study. We have started the Phase 2 randomized single blinded clinical trial of GCS-100 for the treatment of CKD. LJPC-501 is a peptide agonist of the renin-angiotensin system, which is designed to help restore kidney function in patients with hepatorenal syndrome, or HRS. We filed an Investigational New Drug Application, or IND with the Food and Drug Administration or FDA for LJPC-501 on May 31, 2013, and received acceptance to move forward with our planned Phase 1 clinical trial and plan to initiate the Phase 1 clinical trial in HRS by the end of 2013. GCS-100 Overview GCS-100 is a complex polysaccharide derived from pectin that binds to, and blocks the activity of galectin-3, a type of galectin. Galectins are a member of a family of proteins in the body called lectins. These proteins interact with carbohydrate sugars located in, on the surface of, and in between cells. This interaction causes the cells to change behavior, including cell movement, multiplication, and other cellular functions. The interactions between lectins and their target carbohydrate sugars occur via a carbohydrate recognition domain, or CRD, within the lectin. Galectins are a subfamily of lectins that have a CRD that bind specifically to beta-galactoside sugar molecules. Galectins have a broad range of functions, including regulation of cell survival and adhesion, promotion of cell-to-cell interactions, growth of blood vessels, regulation of the immune response and inflammation. Over-expression of galectin-3 has been implicated in a number of human diseases, including chronic organ failure and cancer. This makes modulation of the activity of galectin-3 an attractive target for therapy in these diseases. Current Clinical Study In December 2012, we announced that the FDA s Division of Cardiovascular and Renal Products had accepted our IND, which included a clinical trial protocol designed to study GCS-100 in patients with CKD. In January 2013, we initiated a Phase 1/2 clinical trial with GCS-100 in patients with CKD. The trial is designed in two parts. Part A (Phase 1) will evaluate the safety of single, ascending doses of GCS-100 and determine a maximum tolerated dose. Part B (Phase 2) will evaluate the safety and activity of multiple doses of GCS-100. Part B is designed to measure activity and will include various markers of kidney function. Part A of the clinical trial has been completed and Part B has been suspended. Part B of the Phase 1/2 trial was suspended after analysis of the Phase 1 data in order to move forward with a new Phase 2 randomized single blinded clinical study of GCS-100 for the treatment of CKD. The Phase 2 clinical trial will dose up to 117 patients weekly up to eight weeks randomized 1:1:1 in three dosing groups, placebo, 1.5 mg/m2, or milligrams per meter squared, and 30 mg/m2, with the primary endpoint being change in estimated Glomerular Filtration Rate or eGFR from baseline compared to placebo and the secondary endpoint being safety. This Phase 2 trial has stared to enroll patients and we expect to receive data from the study during the first half of 2014. LJPC-501 Overview LJPC-501 is a peptide agonist of the renin-angiotensin system that acts to help the kidneys balance body fluids and electrolytes. Studies have shown that LJPC-501 may improve renal function in patients with HRS. HRS is a life-threatening form of progressive renal failure in patients with liver cirrhosis or fulminant liver failure. In these patients, the diseased liver secretes vasodilator substances (e.g., nitric oxide and prostaglandins) into the bloodstream that cause under-filling of blood vessels. This low-blood-pressure state causes a reduction in blood flow to the kidneys. As a means to restore systemic blood pressure, the kidneys induce both sodium and water retention, which contribute to ascites, a major complication associated with HRS.HRS is categorized into two types, based on the rapidity of the progression of renal failure as measured by a marker called serum creatinine. Type 1 HRS is the more rapidly progressing type and is characterized by a 100% increase in serum creatinine to > 2.5 mg/dL, or milligrams per deciliter, within two weeks. Fewer than 10% of people with Type 1 HRS survive hospitalization, and the median survival is only a few weeks. Type 2 HRS is slower progressing, with serum creatinine rising gradually; however, patients with Type 2 HRS can develop sudden renal failure and progress to Type 1 HRS. Although ascites occurs in both Type 1 and Type 2 HRS, recurrent ascites is a major clinical characteristic of Type 2 HRS patients, and median survival is only four to six months. We estimate that HRS affects an estimated 90,000 people in the United States, and most of these patients will die from this disease. Table of Contents La Jolla Pharmaceutical Company Consolidated Statements of Convertible Preferred Stock and Stockholders Equity (Deficit) For the Years Ended December 31, 2012 and 2011 (In thousands) Series C-12 Redeemable Convertible Preferred Stock Series C-12 Convertible Preferred Stock Series C-22 Convertible Preferred Stock Series D-12 Convertible Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders (Deficit) Equity Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Balance at December 31, 2010 6 $ 47 $ $ $ 9 $ $ 428,563 $ (428,081 ) $ 482 Issuance of Series C-11 Preferred Stock dividends 58 Conversion of Series C-11 Preferred Stock (1 ) (588 ) 865 904 904 Share-based compensation expense 254 254 Series C-11 Preferred Stock dividends 90 (197 ) (197 ) Forfeit of Series C-11 Preferred Stock dividend (5 ) 78 78 Adjustment to redemption value 5,531 (5,531 ) (5,531 ) Net loss (11,548 ) (11,548 ) Balance at December 31, 2011 5 5,133 874 424,071 (439,629 ) (15,558 ) Issuance of Series C-12 Preferred Stock dividends 1 780 (780 ) (780 ) Series C-12 Preferred Stock dividends (90 ) (56 ) (56 ) Conversion of Series C-12 Preferred Stock (31 ) 6,358 1 30 31 Exercised Series C-22 warrants for Series C-22 Preferred Stock 1 500 500 Exercised Series D-12 warrants for Series D-12 Preferred Stock 5 4,631 (4,631 ) Conversion of Series D-12 Preferred Stock (16 ) 3,347 16 Share-based compensation expense 8,604 8,604 Issuance of restricted stock awards 3,688 Removal of redemption and certain conversion features (6 ) (5,792 ) 6 5,792 12,418 18,210 Net income (7,737 ) (7,737 ) Balance at December 31, 2012 $ 6 $ 5,792 1 $ 500 5 $ 4,615 14,267 $ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Securities Exchange Act of 1934. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company x CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered(1) Proposed maximum offering price per share(2) Proposed maximum aggregate offering price(2) Amount of registration fee(2) Common Stock, par value $0.0001 per share 142,857,139 $0.17 $24,285,714 $3,128 (1) Represents shares of Common Stock, par value $0.0001 per share that may be sold by the selling stockholders named in this registration statement. Pursuant to Rule 416 of the Securities Act of 1933, as amended, this registration statement also covers such an indeterminate amount of shares of Common Stock as may become issuable to prevent dilution resulting from stock splits, stock dividends and similar events. (2) Pursuant to Rule 457(c), calculated on the basis of the average of the high and low prices of the registrant s Common Stock quoted on the OTCQB tier of the OTC Markets Group Inc. on November 7, 2013. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. In February 2013, we conducted a meeting with the FDA to discuss the design for a clinical trial studying LJPC-501 in patients suffering from HRS. Based on feedback from this meeting, we filed an IND on May 31, 2013 and received acceptance to move forward with our planned Phase 1 clinical study of LJPC-501 for the treatment of HRS. We plan to initiate the Phase 1 clinical trial of LJPC-501for the treatment of HRS by the end of 2013. Recent Business Developments On September 24, 2013, the Company entered into a Securities Purchase Agreement with the purchasers thereto (the Securities Purchase Agreement ), pursuant to which the Company agreed to sell, for an aggregate price of $10 million, approximately 96,431,000 shares of the Company s Common Stock, par value $0.0001 per share (the Common Stock ), at a price of $0.07 per share (the Common Shares ) and approximately 3,250 shares of Series F Convertible Preferred Stock at a price of $1,000 per share (the Preferred Shares and, together with the Common Shares, the Shares ) (the Private Placement ). The Private Placement closed on September 27, 2013, subject to customary closing conditions (the Closing ). The estimated proceeds to the Company, net of commissions, was approximately $9.7 million. Risks Related to La Jolla We face a number of risks and uncertainties, including the following: We have only limited assets. The technology underlying our compounds is uncertain and unproven. Results from any future clinical trials we may undertake may not be sufficient to obtain regulatory approvals to market our drug candidates in the United States or other countries on a timely basis, if at all. Future clinical trials that we may undertake may be delayed or halted. If the third-party manufacturers upon which we rely fail to produce our drug candidates that we require on a timely basis, or to comply with stringent regulations applicable to pharmaceutical drug manufacturers, we may face delays in the trials, regulatory submissions, required approvals or commercialization of our drug candidates. Our success in developing and marketing our drug candidates depends significantly on our ability to obtain patent protection. In addition, we will need to successfully preserve our trade secrets and operate without infringing on the rights of others. Because a number of companies compete with us, many of which have greater resources than we do, and because we face rapid changes in technology in our industry, we cannot be certain that our products will be accepted in the marketplace or capture market share. Our stock has only limited trading volume, which may adversely impact the ability of stockholders to sell shares at a desired price, or to fully liquidate their holdings. The price of our common stock has been, and will be, volatile and may continue to decline. Our common stock is considered a penny stock and does not qualify for exemption from the penny stock restrictions, which may make it more difficult for you to sell your shares. For further discussion of these and other risks and uncertainties that La Jolla faces, see the Risk Factors section beginning on page 4 of this prospectus. Corporate Information Our principal executive offices are located at 4660 La Jolla Village Drive, Suite 1070, San Diego, California 92122 and our telephone number is (858) 207-4264. Our Internet address is www.ljpc.com. Our website and the information contained on that site, or connected to that site, is not part of or incorporated by reference into this prospectus. The information in this preliminary prospectus is not complete and may be changed. These securities may not be distributed until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, Dated November 8, 2013 PROSPECTUS La Jolla Pharmaceutical Company 142,857,139 Shares of Common Stock THE OFFERING Common stock covered by this prospectus: Up to 142,857,139 shares of Common Stock Common stock outstanding as of November 1, 2013: 220,220,368 shares Use of proceeds: The Selling Stockholders will receive all of the proceeds from the sale of the shares offered for sale by them under this prospectus. We will not receive proceeds from the sale of the shares by the Selling Stockholders. See Use of Proceeds.
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus that we consider important. This summary does not contain all of the information you should consider before investing in our ordinary shares. You should read the following summary together with the more detailed information regarding us and the securities being sold in this offering, including the risks discussed under the heading Risk Factors, contained in this prospectus. You should also read carefully the consolidated financial statements and notes thereto and the other information about us that is incorporated by reference into this prospectus, including our annual report on Form 20-F for the fiscal year ended December 31, 2012 filed with the Securities and Exchange Commission on April 30, 2013, referred to as our Form 20-F for 2012, and our Form 6-K regarding our financial results for the period ended June 30, 2013 and recent material transactions, all incorporated by reference into this prospectus. Our Company BluePhoenix solves enterprise problems specific to legacy technology and mainframe modernization. Our technology helps customers reduce cost around existing mainframe applications, integrate legacy data with modern platforms and reduce risk around migrating to new target states. Our solution portfolio includes software and professional services that address information technology ( IT ) challenges that organizations and companies face today, including: lack of agility and responsiveness to changing business needs; difficulty in recruiting and retaining mainframe professionals; growing cost of infrastructure software licenses, maintenance and operations; difficulties in complying with new regulations; and use of old technologies which prevent access to modern technology and inhibit the ability to meet business expectations. Our solutions enable companies to: better understand and manage their IT systems and resources; effectively plan and carry out strategic projects that provide real business value; transform to modern technology, which we believe enables enterprises to recruit professional resources easily; significantly decrease maintenance, human resource, and technology costs; easily integrate packaged applications and build customized applications; substantially transform applications and databases in order to address regulatory and business changes; directly gain access to cutting edge technology and new business channels; and leverage off mainframe computing in either a public or private cloud. We provide our modernization solutions directly to our customers or through our strategic partners, such as IBM, CSC, Oracle, Microsoft, HP, NCS, T-Systems, Cognizant, Capgemini and Dell. Additionally, from time to time, other IT services companies license our technologies for use in modernization projects in various markets. Our partners include system integrators, as well as other software vendors who assist us in increasing our penetration and exposure in the market. We provide solutions to our partners customers in collaboration with the system integrator s team. In most cases, the partners provide related services to the customers. Our arrangements with our partners vary. We may enter into distribution agreements under which we grant license rights to our partners or to the partners customers or provide related services, or a combination of both. Alternatively, we may enter into subcontractor relationships with our strategic partners. Private Placement and Selling Shareholder On November 25, 2013, we issued and sold in a private placement an aggregate of 625,000 of our ordinary shares at a price per share of $4.00 to an existing shareholder who is an accredited investor. We received aggregate gross proceeds of $2.5 million. Our issuance of our ordinary shares was exempt from registration under Section 4(2) of the Securities Act. This prospectus relates to the sale or other disposition from time to time of up to 625,000 of our ordinary shares issued in the private placement, which are held by Prescott Group Aggressive Small Cap Master Fund, G.P. and its pledgees, donees, transferees or other successors-in-interest. This private placement also may require us to issue up to an additional 1,042,523 of our ordinary shares pursuant to the anti-dilution rights of the selling shareholder as described in the The Private Placement section of this prospectus. If any such anti-dilution ordinary shares are issued, we will be required to file an additional registration statement to cover the sale or other disposition of such ordinary shares. Recent Developments Transition from Foreign Private Issuer status to Domestic Issuer status. As of January 1, 2014, we will lose our foreign private issuer status, and accordingly, we will be required to comply with the disclosure and reporting requirements of domestic U.S. filers. As a result, the benefits currently available to us as a foreign private issuer will no longer be available to us. We anticipate that the transition to the status of a domestic issuer would result in additional costs and expenses to us. For additional information see Risk Factors Risks Related to Our Trading Securities. Comerica Loan. As of October 2, 2013, we have entered into a loan agreement with Comerica Bank with the following basic terms: non-formula revolving line in the amount up to $500,000 backed by a guarantee; borrowing base (accounts receivable based) loan in the amount up to $500,000; both the non-formula revolving line and borrowing base loan are at market based interest rates based on Prime + a margin; one year commitment; and no financial covenants. We paid off our prior credit facility with Leumi bank on October 28, 2013. 2009 Warrants. On August 31, 2013, one of the institutional investors holding warrants issued in 2009 exercised such warrants for 25,585 ordinary shares at an exercise price of $1.5634 per ordinary share. Liolios Warrants. On August 31, 2013, a portion of the warrants issued to Liolios Group, Inc., exercisable for 1,500 ordinary shares, expired. On September 30, 2013, the remaining warrants issued to Liolios Group, Inc. exercisable for an additional 1,500 ordinary shares expired. Other Material Changes We have also undergone other changes since the filing of our most recent Annual Report on Form 20-F, which are described in our Reports of Foreign Private Issuer on Form 6-K that are incorporated by reference herein (as described under Where You Can Find More Information and Incorporation of Certain Information by Reference below).
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY You should read the following summary together with the more detailed information and the financial statements appearing elsewhere in this Prospectus. This Prospectus contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under Risk Factors and elsewhere in this Prospectus. Unless the context indicates or suggests otherwise, references to we, our, us, the Company, or the Registrant refer to American Petro-Hunter Inc., a Nevada corporation. Our Business We are an oil and natural gas exploration and production (E&P) company with current projects in Payne and Lincoln Counties in Oklahoma. As of July 8, 2013, we have six producing wells in Oklahoma. We also have ownership of 1,410.7 net acres and rights for the exploration and production of oil and gas on an aggregate of approximately 4,733.8 gross acres in Oklahoma. This includes rights to explore on 1,847 gross acres in Oklahoma in the North Oklahoma Mississippi Project and in 2,886 gross acres in south-central Oklahoma (the South Oklahoma Project ). In 2012, oil sales from our producing wells averaged 13.1 cumulative barrels per day. Typically, our interest in a well arises from a contract with another entity pursuant to which we provide financial support for certain costs incurred in the exploration and development of a project, which may include land costs, seismic or other exploration, and test drilling. In exchange, we typically receive an interest in the proceeds from the project s production. Our future operations will require substantial capital expenditures which will exceed our current revenues. Therefore, we are dependent upon the identification and successful completion of additional long-term or permanent equity financings, the support of creditors and shareholders, and, ultimately, the achievement of profitable operations. There can be no assurances that we will be successful, which would in turn significantly affect our ability to meet our business objectives. If we are not successful we will likely be required to reduce operations or liquidate assets. We will continue to evaluate our projected expenditures relative to our available cash and to seek additional means of financing in order to satisfy our acquisition, working capital and other cash requirements. We continue to operate with very limited administrative support, and our current officers and directors continue to be responsible for many duties to preserve our working capital. We expect no significant changes in the number of employees over the next 12 months. Our current burn rate is approximately $35,000 per month and we currently have approximately $2,000 in cash on hand. We are dependent on additional capital to continue to operate. Failure to complete a financing will have an adverse effect on our ability to operate and execute our business plan. Based on the current burn rate, the Company does not currently have sufficient capital to operate and we are doing so on a very limited budget. As a result, our accounts payable are expected to grow. If we are unable to raise capital or generate sufficient revenue, we will have to liquidate or sell certain assets. If we do raise capital, it will most likely be obtained through equity or debt financings. There are no assurances that we will be able to raise the required working capital on terms favorable to the Company, or that such working capital will be available on any terms when needed. Any such capital that is raised may result in substantial dilution to our existing stockholders. During the year ended December 31, 2012, we raised $727,200 from promissory notes. We also received recorded $308,770 in revenue during the year ended December 31, 2012 from our producing wells. For the fiscal year ended December 31, 2012, we incurred a net loss of $3,303,136. As filed with the Securities and Exchange Commission on July 31, 2013 Registration No. [ ] UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AMERICAN PETRO-HUNTER INC. (Exact name of registrant as specified in its charter) Nevada 1389 98-0537233 (State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.) 250 N. Rock Rd., Suite 365 Wichita KS 67206 (316) 201-1853 (Address and telephone number of principal executive offices and principal place of business) Laughlin Associates, Inc. 9120 Double Diamond Pkwy Reno, NV 89521 (Name, address and telephone number of agent for service) Copies to: Mark C. Lee Saxon Peters GREENBERG TRAURIG, LLP 1201 K Street, Suite 1100 Sacramento, California 95814 Telephone: (916) 442-1111 Facsimile: (916) 448-1709 Approximate date of proposed sale to the public: From time to time after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) Corporate Information We were formed on January 24, 1996 pursuant to the laws of the State of Nevada under the name Wolf Exploration, Inc. In August 2001, we changed our name to American Petro-Hunter Inc. and began focusing our business on the exploration and eventual exploitation of oil and gas. The Company operates from its offices at 250 N Rock Rd., Suite 365 Wichita, KS. Our telephone number is (316) 201-1853. Transfer Agent Our transfer agent is Holladay Stock Transfer, and is located at 2939 N 67th Place, Scottsdale, Arizona 85251. The agent s telephone number is (480) 481-3940. Equity Enhancement Program with Hanover Holdings I, LLC Common Stock Purchase Agreement On June 24, 2013, which we refer to as the Closing Date, we entered into the Purchase Agreement with Hanover. The Purchase Agreement provides that, upon the terms and subject to the conditions set forth therein, Hanover is committed to purchase up to $5,000,000, which we refer to as the Total Commitment, worth of our common stock, which we refer to as the Shares, over the 24-month term of the Purchase Agreement. From time to time over the term of the Purchase Agreement, commencing on the trading day immediately following the date on which the registration statement of which this prospectus is a part is declared effective by the Securities and Exchange Commission, or the Commission, we may, in our sole discretion, provide Hanover with draw down notices, each a Draw Down Notice, to purchase a specified dollar amount of Shares, or the Draw Down Amount, over a 10 consecutive trading day period commencing on the trading day specified in the applicable Draw Down Notice, or the Pricing Period, with each draw down subject to the limitations discussed below. The maximum amount of Shares requested to be purchased pursuant to any single Draw Down Notice cannot exceed 300% of the average daily trading volume of our common stock for the 10 trading days immediately preceding the date of the Draw Down Notice, or the Maximum Draw Down Amount. Once presented with a Draw Down Notice, Hanover is required to purchase a pro rata portion of the applicable Draw Down Amount on each trading day during the applicable Pricing Period on which the daily volume weighted average price for our common stock, or the VWAP, equals or exceeds an applicable floor price, or the Floor Price, equal to the product of (i) 0.70 and (ii) the VWAP over the 10 trading days immediately preceding the date the Draw Down Notice is delivered, subject to adjustment. If the VWAP falls below the applicable Floor Price on any trading day during the applicable Pricing Period, the Purchase Agreement provides that Hanover will not be required to purchase the pro rata portion of the applicable Draw Down Amount allocated to that trading day. The per share purchase price for the Shares subject to a Draw Down Notice will equal to 90.0% of the arithmetic average of the three lowest VWAPs that equal or exceed the applicable Floor Price during the applicable Pricing Period, except that if the VWAP does not equal or exceed the applicable Floor Price for at least three trading days during the applicable Pricing Period, then the per share purchase price will be equal to 90.0% of the arithmetic average of all VWAPs that equal or exceed the applicable Floor Price during such Pricing Period. Each purchase pursuant to a draw down will reduce, on a dollar-for-dollar basis, the Total Commitment under the Purchase Agreement. We are prohibited from issuing a Draw Down Notice if (i) the amount requested in such Draw Down Notice exceeds the Maximum Draw Down Amount, (ii) the sale of Shares pursuant to such Draw Down Notice would cause us to issue or sell or Hanover to acquire or purchase an aggregate dollar value of Shares that would exceed the Total Commitment, or (iii) the sale of Shares pursuant to the Draw Down Notice would cause us to sell or Hanover to purchase an aggregate number of shares of our common stock which would result in beneficial ownership by Hanover of more than 4.99% of our common stock (as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the rules and regulations thereunder). We cannot make more than one draw down in any Pricing Period and must allow 24 hours to elapse between the completion of the settlement of any one draw down and the commencement of a Pricing Period for any other draw down. CALCULATION OF REGISTRATION FEE Proposed Proposed Amount of Shares maximum maximum Amount of Title of each class of to be offering price aggregate Registration securities to be registered Registered per share offering price Fee Common Stock 14,417,524 (1) $ 0.01135 (2) $ 163,638.90 $ 22.32 (2) Common Stock 1,764,706 (3) $ 0.085 $ 150,000.00 $ 20.46 Total 16,182,230 $ 313,638.90 $ 42.78 (1) Represents shares issuable pursuant to the Common Stock Purchase Agreement, between the Company and Hanover Holdings I, LLC, a New York limited liability company ( Hanover ), dated June 24, 2013 (the Purchase Agreement ) at a to be determined price per share equal to 90.0% of the arithmetic average of the three lowest volume weighted average prices for the Company s common stock ( VWAPs ) that equal or exceed the applicable floor price during a ten (10) trading day pricing period commencing on the date of notice of the draw down; provided, however, that if the VWAP does not equal or exceed the floor price for at least three trading days during the pricing period, then the per share purchase price shall be equal to 90.0% of the arithmetic average of all VWAPs that equal or exceed the floor price during such pricing period. (2) Calculated in accordance with Rule 457(c) of the Securities Act, based upon the average high and low prices reported on the Over the Counter Bulletin Board on July 30, 2013. (3) Includes 1,764,706 shares of the Company s Common Stock issued on March 22, 2013 to Hanover in satisfaction of a $150,000 commitment fee paid to Hanover for entering into the Common Stock Purchase Agreement, dated March 22, 2013, based upon a price per share equal to $0.085 per share. We hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until we shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Hanover has agreed that during the term of the Purchase Agreement, neither Hanover nor any of its affiliates will, directly or indirectly, engage in any short sales involving our securities or grant any option to purchase, or acquire any right to dispose of or otherwise dispose for value of, any shares of our common stock or any securities convertible into or exercisable or exchangeable for any shares of our common stock, or enter into any swap, hedge or other similar agreement that transfers, in whole or in part, the economic risk of ownership of any shares of our common stock, provided that Hanover will not be prohibited from engaging in certain transactions relating to any of the shares of our common stock that it owns or that it is obligated to purchase under a pending Draw Down Notice. The Purchase Agreement contains customary representations, warranties and covenants by, among and for the benefit of the parties. The Purchase Agreement may be terminated at any time by the mutual written consent of the parties. Unless earlier terminated, the Purchase Agreement will terminate automatically on the earlier to occur of (i) the first day of the month next following the 24-month anniversary of the date on which the registration statement of which this prospectus is a part is declared effective by the Commission or (ii) the date on which Hanover purchases the Total Commitment worth of common stock under the Purchase Agreement. Under certain circumstances set forth in the Purchase Agreement, we and Hanover each may terminate the Purchase Agreement on one trading day s prior written notice to the other. We paid to Hanover a commitment fee for entering into the March Purchase Agreement equal to $150,000 (or 3.0% of the Total Commitment under the March Purchase Agreement) in the form of 1,764,706 restricted shares of our common stock, which we refer to as the Commitment Shares, calculated at a price equal to $0.085 per share, which was the closing price of our common stock on March 4, 2013. The Commitment Shares are being registered for resale in the registration statement of which this prospectus is a part. We also agreed to pay up to $15,000 of reasonable attorneys' fees and expenses (exclusive of disbursements and out-of-pocket expenses) incurred by Hanover in connection with the preparation, negotiation, execution and delivery of the Purchase Agreement and related transaction documentation. Further, if we issue a Draw Down Notice and fail to deliver the shares to Hanover on the applicable settlement date, and such failure continues for 10 trading days, we agreed to pay Hanover, in addition to all other remedies available to Hanover under the Purchase Agreement, an amount in cash equal to 2.0% of the purchase price of such shares for each 30-day period the shares are not delivered, plus accrued interest. The Purchase Agreement also provides for indemnification of Hanover and its affiliates in the event that Hanover incurs losses, liabilities, obligations, claims, contingencies, damages, costs and expenses related to a breach by us of any of our representations and warranties under the Purchase Agreement or the other related transaction documents or any action instituted against Hanover or its affiliates due to the transactions contemplated by the Purchase Agreement or other transaction documents, subject to certain limitations. Registration Rights Agreement In connection with the execution of the Purchase Agreement, on the Closing Date, we and Hanover also entered into a registration rights agreement dated as of the Closing Date, or the Registration Rights Agreement. Pursuant to the Registration Rights Agreement, we agreed to file the registration statement of which this prospectus is a part with the Commission to register for resale 16,182,230 Shares, which includes the 1,764,706 Commitment Shares, on or prior to July 13, 2013, which we refer to as the Filing Deadline, and have it declared effective at the earlier of (A) the 90th calendar day after the Closing Date and (B) the fifth business day after the date the Company is notified by the Commission that the Registration Statement will not be reviewed or will not be subject to further review, which we refer to as the Effectiveness Deadline. Prior to July 13, 2013, Hanover waived compliance with the Filing Deadline of July 13, 2013. No other provision of the Registration Rights Agreement was waived. The effectiveness of the Registration Statement of which this Prospectus is a part is a condition precedent to our ability to sell common stock to Hanover under the Purchase Agreement. We have agreed to file with the Commission one or more additional registration statements to cover all of the securities required to be registered under the Registration Rights Agreement that are not covered by this prospectus, in each case, as soon as practicable, but in no event later than the applicable filing deadline for such additional registration statements as provided in the Registration Rights Agreement. We also agreed, among other things, to indemnify Hanover from certain liabilities and fees and expenses of Hanover incident to our obligations under the Registration Rights Agreement, including certain liabilities under the Securities Act. Hanover has agreed to indemnify and hold harmless us and each of our directors, officers and persons who control us against certain liabilities that may be based upon written information furnished by Hanover to us for inclusion in the registration statement of which this prospectus is a part, including certain liabilities under the Securities Act. SUBJECT TO COMPLETION, DATED JULY 31, 2013 PROSPECTUS 16,182,230 SHARES OF COMMON STOCK AMERICAN PETRO-HUNTER INC. This prospectus relates to the resale of up to an aggregate of 16,182,230 shares of our common stock, par value $0.001 per share, by Hanover Holdings I, LLC, a New York limited liability company ( Hanover or Selling Stockholder ), 14,417,524 of which (the Purchase Shares ) are issuable to Hanover pursuant to the terms of the Common Stock Purchase Agreement, between the Company and Hanover, dated June 24, 2013 (the Purchase Agreement ) and1,764,706 of which were issued to Hanover on March 22, 2013 in satisfaction of a $150,000 commitment fee paid to Hanover for entering into the Common Stock Purchase Agreement, between the Company and Hanover, dated March 22, 2013 (the March Purchase Agreement ), based upon a price per share equal to $0.085 per share. See the section of this prospectus entitled Equity Enhancement Program With Hanover for a description of the Purchase Agreement and the section entitled Selling Stockholder for additional information regarding Hanover. We are not selling any securities under this prospectus and will not receive any of the proceeds from the resale of shares of our common stock by the selling stockholder under this prospectus, however, we may receive gross proceeds of up to $5,000,000 from sales of our common stock to Hanover under the Purchase Agreement. Hanover may offer all or part of the shares for resale from time to time through public or private transactions, at either prevailing market prices or at privately negotiated prices. We provide more information about how Hanover may sell its shares of common stock in the section titled Plan of Distribution on page 22. We will pay the expenses incurred in connection with the offering described in this prospectus, with the exception of brokerage expenses, fees, discounts and commissions, which will be paid by the selling stockholder. In addition, we issued 1,764,706 shares of our common stock to Hanover as a commitment fee for entering into the March Purchase Agreement. Hanover is an underwriter within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended, or the Securities Act. Our common stock is quoted on the OTC Bulletin Board under the symbol "AAPH" The shares of our common stock registered hereunder are being offered for sale by Selling Stockholder at prices established on the OTC Bulletin Board during the term of this offering. On July 30, 2013, the closing bid price of our common stock was $0.01 per share. These prices will fluctuate based on the demand for our common stock. INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE RISK FACTORS BEGINNING ON PAGE 2 OF THIS PROSPECTUS. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The information in this Prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This Prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted or would be unlawful prior to registration or qualification under the securities laws of any such state. Termination Agreement On March 22, 2013, we entered into the March Purchase Agreement and a registration rights agreement, or the March Registration Rights Agreement and, together with the March Purchase Agreement, the Original Agreements with Hanover whereby the Hanover was to purchase up to $5,000,000 of our common stock. As a result of comments received from the Commission with respect to the registration statement filed by the Company in connection with the transactions contemplated by the Original Agreements, the Company and Hanover entered into a termination agreement, dated June 24, 2013, or the Termination Agreement, to terminate the Original Agreements and the transactions contemplated thereby; provided however, that the Commitment Shares were fully earned and will remain outstanding. The Offering As of July 8, 2013, there were 62,215,597 shares of our common stock outstanding, of which 61,315,597 shares were held by non-affiliates, excluding the 1,764,706 Commitment Shares that we have already issued to Hanover under the March Purchase Agreement. Although the Purchase Agreement provides that we may sell up to $5,000,000 of our common stock to Hanover, only 16,182,230 shares of our common stock are being offered under this prospectus, which represents (i) 1,764,706 shares of common stock that we issued to Hanover as Commitment Shares and (ii) 14,417,524 shares of common stock that we may issue to Hanover as Shares pursuant to draw downs under the Purchase Agreement. If all of the 16,182,230 shares offered under this prospectus were issued and outstanding as of July 8, 2013, such shares would represent approximately 21.12% of the total number of shares of our common stock outstanding and 21.37% of the total number of outstanding shares of our common stock held by non-affiliates, in each case as of July 8, 2013. At an assumed purchase price of $0.0072 (equal to 90.0% of the closing price of our common stock of $0.008 on July 8, 2013), and assuming the sale by us to Hanover of all of the 14,417,524 Shares being registered hereunder pursuant to draw downs under the Purchase Agreement, we would receive only approximately $103,806.17 in gross proceeds. If we elect to issue and sell more than the 14,417,524 Shares offered under this prospectus to Hanover, which we have the right, but not the obligation, to do, we must first register for resale under the Securities Act any such additional Shares, which could cause additional substantial dilution to our stockholders. Based on the above assumptions, we would be required to register an additional approximately 680,026,921 shares of our common stock to obtain the balance of $5,000,000 of the Total Commitment that would be available to us under the Purchase Agreement. We currently have authorized and available for issuance only 200,000,000 shares of our common stock pursuant to our charter. Accordingly, we would have to amend our charter, which would require shareholder approval, to obtain the substantial bulk of the Total Commitment. The number of shares of our common stock ultimately offered for resale by Hanover is dependent upon the number of shares we ultimately issue and sell to Hanover under the Purchase Agreement. The Total Commitment of $5,000,000 was determined based on numerous factors, including our estimated operating expenses for the next two years. While it is difficult to estimate the likelihood that we will need the full Total Commitment, we presently believe that we may need the full Total Commitment under the Purchase Agreement. The Offering Issuer American Petro-Hunter Inc. Securities Offered for Resale Up to an aggregate of 16,182,230 shares of our common stock, consisting of: 1,764,706 shares of common stock that we issued to Hanover as Commitment Shares; and 14,417,524 shares of common stock that we may issue to Hanover as Shares pursuant to draw downs under the Purchase Agreement. Common Stock Outstanding Before the Offering 62,215,597 shares Common Stock to be Outstanding After the Offering 76,633,121 shares assuming all of the Securities are Resold Use of Proceeds We will not receive any proceeds from the sale of shares by the selling stockholder. However, we will receive proceeds from the sale of Shares to Hanover pursuant to the Purchase Agreement. The net proceeds received under the Purchase Agreement will be used for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for other purposes that our Board of Directors, in its good faith deem to be in the best interest of the company and its stockholders. Trading Our common stock is quoted on the OTC Bulletin Board under the symbol AAPH Risk Factors The common stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See Risk Factors . SUMMARY OF FINANCIAL INFORMATION The following selected financial information is derived from the Company s Financial Statements appearing elsewhere in this Prospectus and should be read in conjunction with the Company s Financial Statements, including the notes thereto, appearing elsewhere in this Prospectus. Summary of Statements of Operations For the Year Ended December 31, 2012: Total revenue $ 308,770 Net loss (3,303,136 ) Net loss per common share (basic and diluted) $ (0.07 ) Weighted average common shares 44,476,603 For the Three Month Period Ending March 31, 2013 (unaudited): Total revenue $ 44,239 Net loss (279,200 ) Net loss per common share (basic and diluted) $ (0.01 ) Weighted average common shares 48,295,256 Statement of Financial Position As of December 31, 2012: Cash $ 16,216 Accounts Receivable 13,735 Total current assets 29,951 Investments in mineral properties, net of accumulated amortization of $132,499 1,582,324 Capitalized financing costs, net of amortization of $6,737 41,263 Total assets $ 1,653,538 Total current liabilities $ 648,461 Total long-term liabilities $ 992,835 Stockholders equity $ 12,242 Total liabilities and stockholders deficit $ 1,653,538 As of March 31, 2013 (unaudited): Cash $ 9,743 Accounts Receivable 18,837 Total current assets 28,580 Investments in mineral properties, net of accumulated amortization of $150,087 1,564,735 Capitalized financing costs, net of amortization of $10,974 190,527 Total assets $ 1,783,842 Total current liabilities $ 751,965 Total long-term liabilities $ 924,541 Stockholders equity $ 107,336 Total liabilities and stockholders deficit $ 1,783,842
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001047170_eastern_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001047170_eastern_prospectus_summary.txt
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+The following summary highlights selected information contained elsewhere or incorporated by reference in this prospectus. Because it is a summary, it may not contain all of the information that is important to you in making an investment decision with respect to the Securities. You should read carefully this entire prospectus, as well as the information incorporated by reference herein and therein, before deciding to invest in the Securities. You should carefully consider the sections entitled Risk Factors in this prospectus and the documents incorporated by reference herein and therein as you determine whether an investment in the Securities is appropriate for you. Our Company Eastern Virginia Bankshares, Inc. is a bank holding company headquartered in Tappahannock, Virginia that was organized and chartered under the laws of the Commonwealth of Virginia on September 5, 1997 and commenced operations on December 29, 1997. Through our wholly-owned bank subsidiary, EVB, we operate 22 full service branches and two drive-in facilities in eastern Virginia. Two of EVB s three predecessor banks, Bank of Northumberland, Inc. and Southside Bank, were established in 1910. The third bank, Hanover Bank, was established as a de novo bank in 2000. In April 2006, these three banks were merged and the surviving bank was re-branded as EVB. EVB is a community bank targeting small to medium-sized businesses and consumers in our traditional coastal plain markets and the emerging suburbs outside of the Richmond and Greater Tidewater areas. Our mission is dedicated to providing the highest quality financial services to our customers, enriching the health and vitality of the communities we serve, and enhancing shareholder value. The Company provides a broad range of personal and commercial banking services including commercial, consumer and real estate loans. We complement our lending operations with an array of retail and commercial deposit products and fee-based services. Our services are delivered locally by well-trained and experienced bankers, whom we empower to make decisions at the local level, so they can provide timely lending decisions and respond promptly to customer inquiries. Having been in many of our markets for over 100 years, we have established relationships with and an understanding of our customers. We believe that, by offering our customers personalized service and a breadth of products, we can compete effectively as we expand within our existing markets and into new markets. The Company currently conducts business through 22 full service branches and two drive-in facilities, primarily in the eastern portion of the state. Our markets are located east of U.S. Route 250 and extend from northeast of Richmond to the Chesapeake Bay in central Virginia and across the James River from Colonial Heights to southeastern Virginia. Geographically, we have four primary market areas: Northern Neck, Middle Peninsula, Capital (suburbs of Richmond) and Southern. As a result of over 100 years of experience serving the Northern Neck and Middle Peninsula regions, we have a stable, loyal customer base and a high deposit market share in these regions. Due to the lower projected population growth of these markets, we expanded in Hanover, Henrico, Gloucester, New Kent and King William Counties and the city of Colonial Heights to target the higher potential growth in these existing and emerging suburban markets. The deposit market share we have accumulated in our Northern Neck, Middle Peninsula and Southern regions has helped fund our loan growth in the emerging suburban areas in the Capital region. We believe that economic growth and bank consolidation have created a growing number of businesses and consumers in need of a broad range of products and services, as well as the high level of personal service that we provide. While we work through the economic challenges of the past few years and look at 2013 as a year to strengthen our existing markets, our long-term business plan is to capitalize on the growth opportunity in our markets by further developing our branch network in our existing markets and augmenting our market area by expanding to the counties near the urban markets of Richmond and Greater Tidewater. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission relating to these securities is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus, dated August 20, 2013 PROSPECTUS Eastern Virginia Bankshares, Inc. 5,240,192 Shares of Series B Preferred Stock 9,890,111 Shares of Common Stock (Including 5,240,192 Shares Underlying the Series B Preferred Stock) This prospectus relates to the securities listed below that may be offered for sale from time to time by the persons named in this prospectus (and their transferees) (the Selling Securityholders ) identified in Selling Securityholders beginning on page 31 of this prospectus who currently own such securities or may acquire such securities upon the conversion or exchange of securities currently held. Investing in
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001082176_kleangas_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001082176_kleangas_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this Prospectus. This summary does not contain all of the information that you should consider before investing in Common Stock. You should carefully read the entire Prospectus, including the section entitled "Risk Factors" and the financial statements and related notes included therein, before you decide whether to invest in Common Stock. If you invest in Common Stock, you are assuming a high degree of risk. See the section entitled "Risk Factors." The "Company" refers to Kleangas Energy Technologies, Inc., a Delaware corporation. "Our," "us," or "we" refer collectively to the Company and its wholly owned subsidiary, Kleangas Energy Technologies, Inc., a Florida corporation ("KET"). Except where the context otherwise requires, "KGS" refers to KET as it existed prior to the merger described below and "KET" refers to KET as it has existed from and after that merger. Overview Our purpose is to design, manufacture and sell systems that generate oxygen and hydrogen by the electrolysis of water and inject these gases into the mixture of fuel and air used in gasoline and diesel engines ("Oxy-Hydrogen Systems"). Initially, we will rely on third parties to manufacture the systems that we sell; as our business develops, we expect to manufacture systems ourselves and to purchase certain components used in their manufacture from third parties. We will market directly with our own sales force by personal contact, dealerships and an internet website primarily to automotive original equipment manufacturers and owners of fleets of cars and trucks. The Company commenced operations in May 2012 and is a development-stage company. The address of the Company is 8110 Ulmerton Rd., Largo, FL 33771 and its telephone number is (727) 364-2744. Our financial statements include only the period commencing with Inception on May 10, 2012, and do not include those of the Company, which was incorporated on January 8, 2008, and which never conducted any business. Accordingly, these financial statements are those of KET, which was the accounting acquirer in the merger which is discussed under the caption "Our History – The Merger" on page 4. Potential investors in the Company s Common Stock should also consider the following matters, in addition to "Risk Factors" commencing on page 6: Our Ability to Continue as a Going Concern Our independent auditor has expressed substantial doubt about our ability to continue as a going concern. Further, we incurred a net loss of $89,621 from our inception on May 10, 2012, through December 31, 2012. Our accumulated deficit at December 31, 2012, was $389,111. Our cash balance as of April 30, 2013, was $23.00. We expect to continue to incur losses at least for the next two fiscal years. For further information about our condition, financial and otherwise, see "Risk Factors," commencing on page 6, and in particular, those appearing under the caption "Risk Factors – Risk Factors Related to Our Financial Condition," beginning on page 6, as well as "Management s Discussion and Analysis of Financial Condition and Results of Operations" on page 33. As used herein, the term "Inception" means May 10, 2012, which is the date on which KET was incorporated and our present business commenced, as well as the date of the commencement of our fiscal period ended December 31, 2012. The Company, however, was incorporated on January 8, 2008. See "Prospectus Summary – Our History" on page 4. The Rate at Which We Are Incurring Indebtedness For the fiscal year ended December 31, 2012, costs of $89,621 were incurred for start-up costs, accrued officers salaries, accrued rent and interest. Our current cash balance as of April 30, 2013, was $23.00. As of December 31, 2012, we had total current liabilities of $362,051. We are currently producing no revenue and are incurring indebtedness at the rate of approximately $12,000 per month, of which $10,000 is for salaries for our two officers, $1,000 is for rent for office and warehouse space rented to us by one of our officers and $1,000 is for advances made by these officers. With the consent of these officers, such salaries and rent are not being paid, but are being accrued as debt on our books; general overhead costs are being funded by our two officers. The advances were made for purchases of goods and services subject to usual trade terms, for ordinary business travel and expenses and for other transactions in the ordinary course of business. There is no agreement in place with respect to these advances, which total approximately $16,000; we are paying no interest thereon; and no portion thereof has been reimbursed to these officers. We plan to start paying salary of $5,000 per month (but no arrearages) to Mr. Wylie and rental of $1,000 per month (but no arrearages) to Mr. Klein when we have received financing of $200,000. We are seeking equity and/or debt financing in an amount of at least $1.5 million that will enable us to continue to meet our capital needs for 2013, and will not commence paying Mr. Klein s salary until we have received this amount; when we receive this amount, we will also consider repayment of arrearages in salary and rent. As long as these officers are willing to forego the payment of salary and rent and to make advances, we will be able to continue in business indefinitely. On the other hand, if these officers were not to continue this arrangement until we were able, if at all, to generate sufficient revenues and/or obtain sufficient financing to meet these costs and expenses, we would no longer be able to continue in business. Neither of these officers is obligated to defer or to continue to defer the payment of salary or rent or to make advances and neither of them has given any indication as to how long he will be willing to do so. See "Risk Factors – We Could Lose Our Officers and Premises" on page 6 for discussion of the adverse impact on our business that could occur if one or both of these officers were to cease such deferral, demand payment of the deferred amounts and/or cease making advances. In the event that our officers were to cease to make advances, we would run out of cash within a few weeks and could not continue to operate, in which case, the Company s stockholders would lose all or substantially all of their investment. We are seeking equity and/or debt financing in an amount of at least $1.5 million that will enable us fully to meet our capital needs for 2013, but cannot give any assurance as to whether, when or in what amounts we will obtain it. We also cannot make material progress in implementing our business plan until we have raised a minimum of $200,000. See "Management s Discussion and Analysis of Financial Condition and Results of Operations – Plan of Operations" on page 35. We have met with several sources of financing, but have not been successful in obtaining funds. We intend to persist in seeking financing and intend to identify possible sources of financing and attempt to interest them in us. The Company expects to incur costs of approximately $19,000 in connection with the offering of its Common Stock pursuant to this Prospectus. In addition, because the Company will be required to file reports with the SEC as a result of the effectiveness of the registration statement of which this Prospectus forms a part, it will incur expenses as a result of being a "public company," primarily in the form of legal and accounting expenses. It is not possible to quantify the amount of these expenses with exactness, because they will depend on the complexity of our business; however, we believe that they will initially range between $25,000 and $35,000 per year. Pledge of the Shares of the Company's Operating Subsidiary The Company has pledged the shares of KET, its operating subsidiary, for the payment of a promissory note in the principal amount of $275,000, which is due in full on August 15, 2013. The Company is presently unable to repay this promissory note and, unless it is able to develop sufficient revenues and/or obtain sufficient financing, it will be unable to repay the promissory note when due. In that event, the lender could sell the shares of KET, which conducts all of our operations, with the result that the Company would be left with no operations and the shareholders would lose all, or substantially all, of their investment. For further information on the promissory note and the pledge, see "Directors, Executive Officers, Promoters and Control Persons – Related Party Transactions – Exchange Transaction" on page 40. In accordance with Our Business Plan, We Will Initially Sell Products Manufactured by a Third Party Although we intend, when we have sufficient revenues and/or financing, to manufacture our own products, our initial business will be that of reselling products manufactured by a third party. For further information respecting this matter and the risks associated with it, see "Description of Business – Private Label Agreement" on page 30. Our History Prior to the Merger The Company was incorporated in Delaware on January 8, 2008, for the purpose of being the vehicle whereby Redmond Capital Corp., a Florida corporation ("Redmond") would change its corporate domicile to Delaware. Redmond was incorporated effective September 12, 1996, in the State of Florida under the corporate name Minex Minerals, Inc. On February 3, 1999, it changed its corporate name to Redmond Capital Corp. Redmond s sole business, which terminated prior to the end of 2004, was the production of an animated television series. On June 14, 2007, the Circuit Court of the Eleventh Circuit in and for Miami-Dade County, Florida, appointed a receiver over the business of Redmond (Case No. 06-21128 CA 10) and on August 28, 2007, that court issued an order releasing the receiver, closing the case and approving certain actions specified in the receiver s report, including the issuance of 32,000,000 shares of the common stock of Redmond to Mark Renschler to compensate him for services theretofore rendered to Redmond. Shortly thereafter, he was elected as Redmond s president, secretary and sole director. On January 8, 2008, Redmond changed its corporate domicile from Florida to Delaware through a process known as "conversion" as permitted by Florida and Delaware law. In the conversion, the Company was incorporated in Delaware and the Company and Redmond effected the conversion by filing certificates of conversion in Delaware and Florida, respectively. On August 14, 2008, the Company effected a 1-for-2,000 reverse split of its common stock. In November 2008, the Company issued 282,000,000 shares of its common stock and 2,000,000 shares of its Series A Preferred Stock to Mr. Renschler (the "Renschler Shares"). In 2009, Mr. Renschler resigned as the Company s sole director and was replaced by Damian Guthrie, who also became its president. On July 31 2010, Mr. Guthrie resigned as an officer and director and was replaced by Richard S. Astrom, who is the father-in-law of Mr. Guthrie. On August 15, 2012, in connection with the merger described below (see "Directors, Executive Officers and Control Persons – Related Parties – Exchange Transaction" on page 40), the Renschler Shares, which had been acquired by Mr. Astrom, were surrendered to the Company and cancelled. Immediately prior to the merger described below and since its inception in January 2008, the Company was, and from at least October 2004 until its acquisition by conversion in January 2008, Redmond was, a shell company, with nominal assets and no operations. The Merger On August 15, 2012, the Company entered into a Plan and Agreement of Merger by and among the Company, KNGS Acquisition, Inc., a Florida corporation and the Company s wholly owned subsidiary ("Acquisition"), and KGS, under which Acquisition was merged with and into KGS, with KGS being the surviving corporation. As a result of the Merger, the Company is are no longer considered a shell company. In connection with the Merger, the Company issued 2,100,000,000 shares of Common Stock to the holders of the common stock of KGS. As a result of the Merger, William B. Wylie and Dennis J. Klein, who are respectively the president and chairman of the board and who are directors of the Company, became its controlling stockholders. Also in connection with the Merger: The Company completed a private placement with 11 investors of 316,500,000 shares of Common Stock for proceeds of $25,000 in cash and payment for services under Securities Purchase Agreements (the "Private Placement"). The Company also entered into Registration Rights Agreements with these investors, under which the Company was obligated to file the registration statement under the Securities Act of which this Prospectus forms a part covering the shares issued in the Private Placement (the "Registration Statement") and is obligated to use its best efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible. Richard S. Astrom, the Company s president and sole director, entered into an Exchange Agreement with the Company, under which 2,000,000 shares of its Common Stock, 2,000,000 shares Series A Preferred Stock and $71,044 of its indebtedness to him were exchanged for a secured promissory note of the Company payable to him in the principal amount of $275,000 and bearing interest at the rate of 0.24% per annum and a payment of $25,000. The promissory note is due August 15, 2013, is subject to acceleration in the event of certain events of default and contains certain restrictive covenants. For further information, see "Directors, Executive Officers and Control Persons – Related Parties –Exchange Transaction" on page 40. On August 28, 2012, KGS filed with the Secretary of State of the State of Florida Certificate of Merger Consummating the Merger and on September 26, 2012, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware changing its corporate name from "Windsor Resource Corp." to "Kleangas Energy Technologies, Inc." As a result of the Merger, our business is now that of the design, manufacture and sale of Oxy-Hydrogen Systems for use in motor vehicles. For more detailed information as to our business, see "Description of Business," which begins on page 29. The Common Stock is quoted on and will be traded over OTCQB under the symbol "KGET." The information contained in this Prospectus, together with the additional information contained in the registration statement of which this Prospectus forms a part, is intended to be "Form 10 Information," as that term is defined in Rule 144 under the Securities Act.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read the entire prospectus carefully together with our consolidated financial statements and the related notes appearing elsewhere in this prospectus. This prospectus contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those discussed in the Risk Factors and other sections of this prospectus. Company Overview We are a leading cloud-based service provider of communications and information technology solutions to small and medium sized business ( SMB ) and enterprise customers nationwide. After several years of development, we began providing cloud-based communication services in 2005 and later introduced into our product portfolio a variety of cloud-based computing solutions. Today, we offer a full suite of cloud-based systems and services to customers nationwide, with more than 100,000 active licenses on our flagship product offering, our cloud-based business communications platform named OfficeSuite , which comprises a growing percentage of our overall revenue and the vast majority of our existing cloud-based revenue stream. We benefit from software development expertise, proprietary technology and a strong next-generation network infrastructure. This allows us to offer our customers more than just cloud-based services, but additionally products that include advanced, converged communications services and network access by leveraging our network infrastructure, on a cost-effective basis. For the three months ended March 31, 2013, over 82% of all new revenue installed during the period was provisioned on our next-generation IP network. We have provided cloud-based services in the Northeast and Mid-Atlantic United States since 2005 and offered cloud-based services nationwide since late 2009. Prior to 2009, our focus had been solely on markets across 10 states, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. These markets remain important markets for us and we have the majority of our direct sales efforts focused on these markets. We distribute our products through quota-bearing sales representatives, including a direct sales force primarily based in the Northeast and Mid-Atlantic United States, sales agents nationwide, and by our expanded efforts in wholesale, web marketing, Value Added Resellers ( VARs ) and nationwide distributor channels. As of March 31, 2013, we provided our services to approximately 30,000 business customers nationwide. For the three months ended March 31, 2013 and the year ended December 31, 2012, approximately 90% and 89%, respectively, of our total revenue was generated from retail end users in a wide array of industries, including professional services, health care, education, manufacturing, real estate, retail, automotive, non-profit groups and others. For the same periods, approximately 10% and 11%, respectively, of our total revenue was generated from wholesale, carrier access and other sources. We have transitioned a significant percentage of our revenue base to T-1- and IP-based products and cloud-based communications services. For the three months ended March 31, 2013 and the year ended December 31, 2012, revenue from these accounts represented 78% and 76%, respectively, of our retail revenue with cloud-based communications services generating 18% and 16%, respectively, of retail revenue. From the first quarter of 2009 to the first quarter of 2013, cloud-based communications products and services have grown at approximately a 27% compound annual growth rate ( CAGR ). For the three months ended March 31, 2013 and the year ended December 31, 2012, we generated total revenues of $80.8 million and $340.9 million, respectively, and Adjusted EBITDA of $11.7 million and $60.2 million, respectively. For more information, see the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations Adjusted EBITDA Presentation. Our product portfolio provides bundled packages that include cloud computing and cloud-based voice services and network connectivity with a focus on addressing the productivity, flexibility, security and business continuity needs of end users operating within complex infrastructures. In addition, our growth initiatives focus Table of Contents TABLE OF CONTENTS Page SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 1 PROSPECTUS SUMMARY 3
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+PROSPECTUS SUMMARY
+
+You should read the
+following summary together with the more detailed information and the financial statements appearing elsewhere in this Prospectus.
+This Prospectus contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially
+from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk
+Factors" and elsewhere in this Prospectus. Unless the context indicates or suggests otherwise, references to "we,"
+"our," "us," the "Company," or the "Registrant" refer to Sanwire Corporation, a
+Nevada corporation. 
+
+Our Business
+
+Corporate Information
+
+Sanwire was incorporated
+in the State of Nevada on February 10, 1997. The Company was formerly named Clear Water Mining, Inc. (February 10 1997 through
+March 11, 1999), E-Casino Gaming Corporation (March 2, 1999 through June 21, 1999), E-Vegas.com Inc. (June 22, 1999 through July
+20, 2000), 1st Genx.com Inc. (July 21, 2000 through October 18, 2001), Oasis Information Systems, Inc. (October 19, 2001 through
+January 27, 2005), 777 Sports Entertainment, Corp. (January 28, 2005 through September 26, 2008) and NT Mining Corporation (September
+28, 2008 through March 8, 2013). The Company operates from its offices at 9710 E. 55th Pl., Tulsa, OK 74146. Our telephone
+number is (800) 243-1254.
+
+Sanwire aims to be a
+global provider of wireless communication services and data solutions; delivering efficient and reliable communications to our
+customers. Sanwire s goal is to operate a number of vertically integrated portfolio of wireless subsidiaries that are synergistic,
+diverse, and operate independently with their own revenue stream and customer base. We strive, however, to have our subsidiaries
+to cross sell to each other with respect to products and services, and share customer base. Sanwire plans to grow organically
+and through complementary acquisitions in the wireless sectors. Currently, Sanwire owns and operates two vertically integrated
+wholly-owned subsidiaries:
+
+ 
+ 
+ iPTerra Technologies, Inc., a Nevada corporation, designs and develops wireless and/or wireline communication solutions for hazardous environments including underground mines. iPTerra s flagship product, the iPMine system, is a real-time 2-way wireless/fiber mine-safety system for the global mining industry. iPMine tracks, monitors, and communicates with miners and equipment underground and above ground. Our strategy is to acquire customers in the U.S. underground coal mining industry and evaluate opportunities in other international mine-safety markets.
+
+ 
+
+ 
+ 
+ Aeronetworks LLC, an Oklahoma limited liability company, provides advanced telecommunications and broadband services to rural communities and Native American tribes with focus on public safety, education and healthcare sectors. Aero delivers 4G/LTE, TV White Space, and advanced wireless technologies.
+
+ 
+
+The Company changed its
+business focus during 2007 and in 2008 and completed the changeover to mining exploration and development, which was the concept
+utilized when the Company was incorporated. In order to complete the transformation, the Company completed a reverse stock split
+during 2008, settled the majority of its liabilities through a share exchange for debt and acquired a privately held Canadian mining
+corporation with a single mining asset, former Gold Producer "The Bullmoose Mine", located in the Northwest Territory
+of Canada. In 2009 and 2010, the company completed a limited program on the mining properties in Canada, sufficient to maintain
+the lease and mineral claims in good standing.
+
+In 2011, the Company
+settled litigation it had initiated to assert its interest in the Bullmoose Mine ("Bullmoose"). Under the settlement,
+the Company s acquisition of Bullmoose will be rescinded. More particularly, the 120,000 shares issued by the company as
+consideration for the acquisition will be cancelled and $75,000 of the $85,000 paid as part consideration for the acquisition,
+will be returned to the Company. The closing date was set for June 30, 2012. Until that date and afterwards, if the settlement
+does not close, the Company continues to retain title to Bullmoose.
+
+ 8
+
+ 
+
+On January 2, 2013, the
+Company signed an exclusive licensing and distribution agreement (the "Licensing Agreement") to sell and market the
+iPMine communication and mine-safety system for underground mines for the European continent. The terms of the agreement includes
+exclusivity for the European market for a 5-year term renewable with an additional 5-year term and first right of refusal option
+to acquire 100% of the iPMine intellectual property. The Company issued 300,000 common shares of the Company at a fair value of
+$300 to the licensor.
+
+On January 14, 2013,
+the Company signed a purchase agreement to acquire 100% ownership in newly created iPTerra Technologies, Inc. for cash consideration
+of $5,500, which shall be paid to a seller within a 12-month period from a closing date. The iPMine system will operate under iPTerra
+Technologies, Inc.
+
+On March 22, 2013, the
+Company exercised its option under the recently executed Licensing Agreement to acquire 100% ownership of the iPMine communication
+and mine-safety system. The iPMine system will operate under the Company s wholly owned subsidiary, iPTerra Technologies,
+Inc. The Company acquired 100% of the iPMine intellectual property for a total consideration of $10,000,000 comprised of 20,000,000
+common shares with a fair value of $0.001 per share for total of $20,000 and the assumption of $9,980,000 in debt (the "Debt")
+in favor to two companies controlled by Naiel Kanno (the "Debt Holders"). On May 10, 2013, the Company and the Debt
+Holders entered into an agreement to convert the Debt into a non-interest bearing convertible promissory note repayable in eighteen
+months with the conversion price of $1.00 per common share at the option of the Debt Holders.
+
+On May 29, 2013, the
+Company completed the acquisition of Aeronetworks LLC ("Aero"), a company based in Tulsa, Oklahoma. In consideration
+for the acquisition, the Company (i) issued Two Million and Four Hundred Thousand (2,400,000) shares of its common stock, (ii)
+issued Three Million (3,000,000) warrants to purchase its common stock in three blocks consisting of One Million (1,000,000) warrants
+each, expiring in 2014, 2015, and 2017 at an exercise price of $0.50, $0.75, and $1.00 respectively, (iii) granted future earn-out
+performance bonus shares based on revenue growth, and (iv) granted a three-year extension to the management
+
+agreement for Aero s
+management team. Aero provides advanced telecommunications and broadband services to rural communities and Native American tribes
+with a focus on public safety, education and healthcare sectors.
+
+On October 20, 2013,
+Aero entered into a letter of intent with Fort Peck Tribes of Montana ("Fort Peck") to provide a full suite of broadband
+infra-structure and communications services to tribal residents located in the Fort Peck reservation, and surrounding businesses.
+Aero will enter into exclusive telecommunications development and supporting contracts and will be retained as a paid operational
+consultant for a five year term with an automatic three-year extension.
+
+Recent Developments
+
+Senior Convertible
+Note Financing with Hanover Holdings I, LLC
+
+Note Purchase Agreement
+and Convertible Note
+
+On July 31, 2013, we entered into a note purchase
+agreement with Hanover, which we refer to as the Note Purchase Agreement. The Note Purchase Agreement provides that,
+upon the terms and subject to the conditions set forth in the Note Purchase Agreement, Hanover will purchase from us the Convertible
+Note with an initial principal amount of $405,000 for a purchase price of $300,000, representing an approximately 25.93% original
+issue discount. We issued the Convertible Note to Hanover on July 31, 2013.
+
+As of the date of filing of this Amendment
+No. 1 to the Registration Statement on Form S-1/A, the principle amount due under the Convertible Note has not been extinguished
+will bear interest at 8% per annum. The total principle amount plus interest due under the Convertible Note as of January 27, 2014
+will equal $421,066.85. The Company does not believe it will have the financial ability to repay the amounts due under the Convertible
+Note as of January 27, 2014 without the use of funds received under the equity line agreement. The Company will, however, entertain
+the note conversion at the holder s option, into shares of common stock of the Company at a minimum share price of $0.2325
+per share.
+
+$75,000 of the outstanding
+principal amount of the Convertible Note (together with any accrued and unpaid interest with respect to such portion of the principal
+amount) will be automatically extinguished (without any cash payment by us) if (i) the registration statement of which this prospectus
+is a part is declared effective by the SEC on or prior to the earlier of (A) the 75th calendar day after July 31,
+2013 and (B) the fifth business day after the date we are notified by the Securities and Exchange Commission, or the Commission,
+that the registration statement will not be reviewed or will not be subject to further review, and this prospectus is available
+for use by Hanover for the resale by Hanover of all of the shares of our common stock issued or issuable upon conversion of the
+Convertible Note and (ii) no event of default under the Convertible Note or an event that with the passage of time or giving of
+notice would constitute an event of default under the Convertible Note has occurred on or prior to such date.
+
+ 9
+
+ 
+
+ 
+
+The Convertible Note
+matures on January 27, 2014 and, in addition to the approximately 25.93% original issue discount, accrues interest at the rate
+of 8.0% per year. The Convertible Note is convertible at any time, in whole or in part, at Hanover s option into shares of
+our common stock at a fixed conversion price of $0.2325 per share, subject to adjustment pursuant to the "full ratchet"
+and standard anti-dilution provisions contained in the Convertible Note. This conversion price represents a discount of 25% from
+the closing price of our common stock of $0.31 on July 24, 2013, which was the lowest closing price of our common stock during
+the five-trading-day period immediately prior to the date we issued the Convertible Note to Hanover. At no time will Hanover be
+entitled to convert any portion of the Convertible Note to the extent that after such conversion, Hanover (together with its affiliates)
+would beneficially own more than 4.99% of our common stock (as calculated pursuant to Section 13(d) of the Securities Exchange
+Act of 1934, as amended, or the Exchange Act, and the rules and regulations thereunder).
+
+The Convertible Note
+includes customary event of default provisions, and provides for a default interest rate of 18%. Upon the occurrence of an event
+of default, Hanover may require us to pay in cash the "Event of Default Redemption Price" which is defined in the Convertible
+Note to mean the greater of (i) the product of (A) the amount to be redeemed multiplied by (B) 125% (or 100% if an insolvency related
+event of default) and (ii) the product of (X) the conversion price in effect at that time multiplied by (Y) the product of (1)
+125% (or 100% if an insolvency related event of default) multiplied by (2) the greatest closing sale price of our common stock
+on any trading day during the period commencing on the date immediately preceding such event of default and ending on the date
+we make the entire payment required to be made under this provision.
+
+We have the right at
+any time to redeem all, but not less than all, of the total outstanding amount then remaining under the Convertible Note in cash
+at a price equal to 120% of the total amount of the Convertible Note then outstanding.
+
+The Note Purchase Agreement
+contains customary representations, warranties and covenants by, among and for the benefit of the parties. We also agreed to pay
+up to $10,000 of reasonable attorneys' fees and expenses incurred by Hanover in connection with the transaction. The Note Purchase
+Agreement also provides for indemnification of Hanover and its affiliates in the event that Hanover incurs losses, liabilities,
+obligations, claims, contingencies, damages, costs and expenses related to a breach by us of any of our representations, warranties
+or covenants under the Note Purchase Agreement.
+
+The issuance of the Convertible
+Note to Hanover under the Note Purchase Agreement was exempt from the registration requirements of the Securities Act pursuant
+to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and
+Rule 506 of Regulation D promulgated under the Securities Act.
+
+Note Registration
+Rights Agreement
+
+In connection with the
+execution of the Note Purchase Agreement, on July 31, 2013, Hanover and we also entered into a registration rights agreement, which
+we refer to as the Note Registration Rights Agreement. Pursuant to the Note Registration Rights Agreement, we agreed to file the
+registration statement of which this prospectus is a part with the Commission to register for resale 1,890,000 shares of our common
+stock into which the Convertible Note may be converted, on or prior to September 3, 2013, and have it declared effective at the
+earlier of (i) the 75th calendar day after July 31, 2013 and (ii) the fifth business day after the date we are
+notified by the Commission that the registration statement will not be reviewed or will not be subject to further review. Prior
+to September 3, 2013, we and Hanover agreed to extend the filing deadline to September 20, 2013.
+
+We have agreed to file
+with the Commission one or more additional registration statements to cover all of the securities required to be registered under
+the Note Registration Rights Agreement that are not covered by this prospectus, in each case, as soon as practicable, but in no
+event later than the applicable filing deadline for such additional registration statements as provided in the Note Registration
+Rights Agreement.
+
+ 10
+
+ 
+
+We also agreed, among
+other things, to indemnify Hanover from certain liabilities and fees and expenses of Hanover incident to our obligations under
+the Note Registration Rights Agreement, including certain liabilities under the Securities Act. Hanover has agreed to indemnify
+and hold harmless us and each of our directors, officers and persons who control us against certain liabilities that may be based
+upon written information furnished by Hanover to us for inclusion in the registration statement of which this prospectus is a part,
+including certain liabilities under the Securities Act.
+
+Equity Enhancement
+Program with Hanover Holdings I, LLC
+
+Common Stock Purchase
+Agreement
+
+On August 28, 2013, which
+we refer to as the Closing Date, we entered into the Purchase Agreement with Hanover. The Purchase Agreement provides
+that, upon the terms and subject to the conditions set forth therein, Hanover is committed to purchase up to
+
+$7,500,000, which we
+refer to as the Total Commitment, worth of our common stock, which we refer to as the Shares, over the 36-month term of the Purchase
+Agreement.
+
+From time to time over
+the term of the Purchase Agreement, commencing on the trading day immediately following the date on which the registration statement
+of which this prospectus is a part is declared effective by the Commission, we may, in our sole discretion, provide Hanover with
+either "regular" draw down notices or, if certain conditions are satisfied, "fixed" draw down notices,
+each referred to as a Draw Down Notice, in each case to purchase a specified dollar amount of Shares, which we refer to as the
+Draw Down Amount, with each draw down subject to the limitations discussed below. The maximum amount of Shares requested to be
+purchased pursuant to any single "regular" Draw Down Notice, each a Regular Draw Down Notice, cannot exceed 300% of
+the average daily trading volume of the Company s common stock for the 20 trading days immediately preceding the date of
+the Regular Draw Down Notice, which we refer to as the Maximum Regular Draw Down Amount. The maximum amount of Shares requested
+to be purchased pursuant to any single "fixed" Draw Down Notice, each a Fixed Draw Down Notice, cannot exceed 200%
+of the average daily trading volume of the Company s common stock for the 20 trading days immediately preceding the date
+of the Fixed Draw Down Notice, which we refer to as the Maximum Fixed Draw Down Amount. Each purchase pursuant to a draw down will
+reduce, on a dollar-for-dollar basis, the Total Commitment under the Purchase Agreement.
+
+We may, in our sole discretion,
+provide Hanover with Regular Draw Down Notices to purchase a specified Draw Down Amount, up to the Maximum Regular Draw Down Amount,
+over a 10 consecutive trading day period commencing on the trading day specified in the applicable Regular Draw Down Notice, which
+we refer to as the Pricing Period. Once presented with a Regular Draw Down Notice, Hanover is required to purchase a pro rata portion
+of the applicable Draw Down Amount on each trading day during the applicable Pricing Period on which the daily volume weighted
+average price for our common stock, or VWAP, equals or exceeds an applicable floor price, or Floor Price, equal to the product
+of (i) 0.70 and (ii) the VWAP over the 10 trading days immediately preceding the date the Regular Draw Down Notice is delivered,
+subject to adjustment for any stock splits, stock combinations, stock dividends, recapitalizations and other similar transactions.
+If the VWAP falls below the applicable Floor Price on any trading day during the applicable Pricing Period, the Purchase Agreement
+provides that Hanover will not purchase the pro rata portion of the applicable Draw Down Amount allocated to that trading day. The
+per share purchase price for the Shares subject to a Regular Draw Down Notice will be equal to 90% of the arithmetic average of
+the three lowest daily VWAPs that equal or exceed the applicable Floor Price during the applicable Pricing Period, except that
+if the VWAP does not equal or exceed the applicable Floor Price for at least three trading days during the applicable Pricing Period,
+then the per share purchase price will be equal to 90% of the arithmetic average of all VWAPs that equal or exceed the applicable
+Floor Price during such Pricing Period. 
+
+We may, in our sole discretion,
+on any trading day on which both of the equity conditions described below are satisfied, provide Hanover with a Fixed Draw Down
+Notice to purchase a specified Draw Down Amount, up to the Maximum Fixed Draw Down Amount, on the applicable settlement date, which
+will occur within one trading day following the date the Fixed Draw Down Notice is delivered. The per share purchase price for
+the Shares subject to a Fixed Draw Down Notice, or the Fixed Purchase Price, will be equal to 75% of the lower of (i) the lowest
+trade price of a share of our common stock on the date the Fixed Draw Down Notice is delivered, which we refer to as the Draw Down
+Exercise Date, and (ii) the arithmetic average of the three lowest daily VWAPs during the 10 consecutive trading days ending on
+the trading day immediately preceding the applicable Draw Down Exercise Date. We may deliver a Fixed Draw Down Notice only if both
+of the following equity conditions have been satisfied as of the applicable Draw Down Exercise Date:
+
+ 11
+
+ 
+
+ 
+ 
+ on each trading day during the period beginning 30 trading days prior to the applicable Draw Down Exercise Date and ending on and including the applicable Draw Down Exercise Date, the lowest trade price of a share of our common stock must be greater than $0.20, subject to adjustment for any stock splits, stock combinations, stock dividends, recapitalizations and other similar transactions, which we refer to as the Fixed Floor Price; and 
+
+ 
+
+ 
+ 
+ on each trading day during the period beginning 30 trading days prior to the applicable Draw Down Exercise Date and ending on and including the applicable Draw Down Exercise Date, the trade price of a share of our common stock must not have declined more than 20% from an intraday high to an intraday low during such trading day.
+
+The Regular Draw Down
+Notice may have a maximum draw down amount equal to 300% of the VWAP in the 20 days prior, while the Fixed Draw Down Notice has
+a maximum of 200% of the VWAP in the 20 days prior, giving the Company the option to make larger put notices. In addition, the
+Regular Draw Down Notice has a cheaper cost of capital, since the shares are discounted to 90%, rather than to 75% which comes
+with the Fixed Draw Down Notice. The Regular Draw Down Notice requires only 24 hours to elapse before the next draw, while the
+Fixed Draw Down Notice requires a full 15 days to elapse.
+
+The Fixed Draw Down Notice
+uses a fixed price, allowing the Company to know the exact proceeds the put will result in. The Regular Draw Down Notice can only
+estimate the amount of the proceeds the Company may receive since the price is calculated after the put is issued. Since the pricing
+period occurs before the Fixed Draw Down Notice is submitted, the Company can expect to receive total proceeds within the first
+trading day after submitting the put notice.
+
+We are prohibited from
+issuing a Draw Down Notice if (i) the amount requested in such Draw Down Notice exceeds the Maximum Regular Draw Down Amount, in
+the case of a Regular Draw Down Notice, or exceeds the Maximum Fixed Draw Down Amount, in the case of a Fixed Draw Down Notice,
+(ii) the sale of Shares pursuant to such Draw Down Notice would cause us to issue or sell or Hanover to acquire or purchase an
+aggregate dollar value of Shares that would exceed the Total Commitment, or (iii) the sale of Shares pursuant to the Draw Down
+Notice would cause us to sell or Hanover to purchase an aggregate number of shares of our common stock which would result in beneficial
+ownership by Hanover of more than 4.99% of our common stock (as calculated pursuant to Section 13(d) of the Exchange Act, and the
+rules and regulations thereunder). With respect to a draw down pursuant to a Regular Draw Down Notice, we cannot make more
+than one draw down (whether pursuant to a Fixed Draw Down Notice or a Regular Draw Down Notice) in any Pricing Period and must
+allow 24 hours to elapse between the completion of the settlement of any one draw down pursuant to a Regular Draw Down Notice and
+the delivery of any Fixed Draw Down Notice or Regular Draw Down Notice for any other draw down. With respect to a draw down pursuant
+to a Fixed Draw Down Notice, we must allow 15 trading days to elapse between the completion of the settlement of any one draw down
+pursuant to a Fixed Draw Down Notice and the delivery of any Fixed Draw Down Notice or Regular Draw Down Notice for any other draw
+down.
+
+The Purchase Agreement
+contains customary representations, warranties and covenants by, among and for the benefit of the parties. The Purchase Agreement
+may be terminated at any time by the mutual written consent of the parties. Unless earlier terminated, the Purchase Agreement will
+terminate automatically on the earliest to occur of (i) the first day of the month next following the 36-month anniversary of the
+date on which the registration statement of which this prospectus is a part is declared effective by the Commission, (ii) the date
+on which Hanover purchases the Total Commitment worth of common stock under the Purchase Agreement and (iii) the date on which
+our common stock ceases to be listed or quoted on an eligible trading market under the Purchase Agreement. Under certain circumstances
+set forth in the Purchase Agreement, we and Hanover each may terminate the Purchase Agreement on one trading day s prior
+written notice to the other, without fee, penalty or cost.
+
+We have agreed to pay
+to Hanover a commitment fee for entering into the Purchase Agreement equal to $150,000 (or 2.0% of the Total Commitment under
+the Purchase Agreement) in the form of 454,408 shares of our common stock, which we refer to as the Initial Commitment Shares,
+calculated using a per share price of $0.3301, representing the lowest daily volume weighted average price of a share of our common
+stock during the three-trading day period immediately preceding the Closing Date. In addition, as soon as practicable following
+the effective date of the registration statement of which this prospectus is a part, we are required to issue to Hanover additional
+shares of our common stock, which we refer to as the Additional Commitment Shares, equal to the greater of (i) zero and (ii)
+the difference of (a) the quotient of (x) $150,000 divided by (y) the greater of (1) the lowest trade price of a share of our common
+stock during the period beginning two trading days immediately preceding the effective date of the registration statement of which
+this prospectus is a part and ending on such effective date and (2) $0.15, less (ii) 454,408, provided that in no event will we
+issue more than an aggregate of 545,592 shares of our common stock, subject to adjustment for any stock splits, stock combinations,
+stock dividends, recapitalizations and other similar transactions, as Additional Commitment Shares. The Initial Commitment Shares,
+together with 545,592 Additional Commitment Shares, are being registered for resale in the registration statement of which this
+prospectus is a part. We sometimes in this prospectus refer to the Initial Commitment Shares and the Additional Commitment Shares,
+collectively, as the Commitment Shares.
+
+We also agreed to pay
+up to $20,000 of reasonable attorneys' fees and expenses (exclusive of disbursements and out-of-pocket expenses) incurred by Hanover
+in connection with the preparation, negotiation, execution and delivery of the Purchase Agreement and related transaction documentation.
+Further, if we issue a Draw Down Notice and fail to deliver the shares to Hanover on the applicable settlement date, we agreed
+to pay Hanover, in addition to all other remedies available to Hanover under the Purchase Agreement, an amount in cash equal to
+2.0% of the purchase price of such shares for each 30-day period the shares are not delivered, plus accrued interest.
+
+ 
+
+ 12
+
+ 
+
+The Purchase Agreement
+also provides for indemnification of Hanover and its affiliates in the event that Hanover incurs losses, liabilities, obligations,
+claims, contingencies, damages, costs and expenses related to a breach by us of any of our representations and warranties under
+the Purchase Agreement or the other related transaction documents or any action instituted against Hanover or its affiliates due
+to the transactions contemplated by the Purchase Agreement or other transaction documents, subject to certain limitations.
+
+Registration Rights
+Agreement
+
+In connection with the
+execution of the Purchase Agreement, on the Closing Date, we and Hanover also entered into a registration rights agreement
+dated as of the Closing Date, which we refer to as the Registration Rights Agreement. Pursuant to the Registration Rights Agreement,
+we agreed to file the registration statement of which this prospectus is a part with the Commission to register for resale 7,651,000
+shares of our common stock, which includes the 454,408 Initial Commitment Shares and 545,592 Additional Commitment Shares, on or
+prior to September 3, 2013, which we refer to as the Filing Deadline, and have it declared effective at the earlier of (A) the
+75th calendar day after the earlier of (1) the Filing Deadline and (2) the date on which the registration statement
+of which this prospectus is a part is filed with the Commission and (B) the fifth business day after the date the Company is notified
+by the Commission that the registration statement will not be reviewed or will not be subject to further review, which we refer
+to as the Effectiveness Deadline. Prior to September 3, 2013, we and Hanover agreed to extend the Filing Deadline to September
+20, 2013. The effectiveness of the registration statement of which this prospectus is a part is a condition precedent to our ability
+to sell common stock to Hanover under the Purchase Agreement.
+
+We have agreed to file
+with the Commission one or more additional registration statements to cover all of the securities required to be registered under
+the Registration Rights Agreement that are not covered by this prospectus, in each case, as soon as practicable, but in no event
+later than the applicable filing deadline for such additional registration statements as provided in the Registration Rights Agreement.
+
+We also agreed, among
+other things, to indemnify Hanover from certain liabilities and fees and expenses of Hanover incident to our obligations under
+the Registration Rights Agreement, including certain liabilities under the Securities Act. Hanover has agreed to indemnify and
+hold harmless us and each of our directors, officers and persons who control us against certain liabilities that may be based upon
+written information furnished by Hanover to us for inclusion in the registration statement of which this prospectus is a part,
+including certain liabilities under the Securities Act.
+
+Recent Issuances
+
+ 
+
+The table below sets forth shares of our common
+stock that have been recently issued in exchange for certain services or rights.
+
+ 
+
+ Date
+ 
+ Issuance of Shares 
+
+ January 3, 2013
+ 
+ The Company issued 300,000 shares of common stock with a fair value of $300 pursuant to the License Agreement. 
+
+ March 22, 2013
+ 
+ The Company exercised its option under the License Agreement to acquire 100% ownership of the iPMine communication and mine safety system. As consideration, the Company issued 20,000,000 shares of common stock with a fair value of $20,000. 
+
+ March 27, 2013
+ 
+ The Company issued 20,000,000 shares of common stock with a fair value of $20,000 to settle debt of $20,000. The shares were issued to Senso Investments (15,000,00 shares for $15,000 fair value) and, Northwest Management Anstalt (5,000,00 shares for $5,000 fair value).
+
+ May 17, 2013
+ 
+ The Company issued 200,000 shares of common stock with a fair value of $58,000 to J R Vetter Consulting, Inc., a company controlled by J R Roland Vetter, the Chief Financial Officer of the Company as compensation under this consultant agreement
+
+ 
+
+ 13
+
+ 
+
+ 
+
+ May 17, 2013
+ 
+ The Company issued 200,000 shares of common stock with a fair value of $58,000 to Biarritz Productions, of which $7,150 was expensed as consulting fees for the pro-rate portion of services rendered to June 30, 2013. 
+
+ May 17, 2013
+ 
+ The Company issued 275,000 shares of common stock with a fair value of $79,750 to Lloyd Donner, of which $9,832 was expensed as consulting fees for the pro-rate portion of services rendered to June 30, 2013
+
+ May 29, 2013
+ 
+ The Company issued 2,400,000 shares of common stock with a fair value of $600,000 to acquire Aero.
+
+ May 29, 2013
+ 
+ The Company issued 300,000 shares of common stock with a fair value of $75,000 to the management team of Aero, which consists of Richard Bjorklund, James Bradley and Samuel Sibala.
+
+ June 1, 2013
+ 
+ The Company issued 50,000 shares of common stock with a fair value of $12,500 to Les Matthews, a consultant.
+
+ June 3, 2013
+ 
+ The Company issued 50,000 shares of common stock with a fair value of $13,500 to George Naylor and John Sisk, both of whom are members of iPTerra s advisory board. 
+
+ June 12, 2013
+ 
+ The Company issued 500,000 of common stock with a fair value of $170,000 to C Dillow & Co., of which $18,580 was expensed as consulting fees for the pro-rate portion of services rendered to June 30, 2013
+
+ June 12, 2013
+ 
+ The Company issued 250,000 shares of common stock with a fair value of $92,500 to Core Consulting, of which $9,604 was expensed as consulting fees for the pro-rate portion of services rendered to June 30, 2013.
+
+ June 27, 2013
+ 
+ The Company issued 500,000 shares of common stock with a fair value of $170,000 to Rovert Consulting, of which $3,716 was expensed as consulting fees for the pro-rate portion of services rendered to June 30, 2013.
+
+ June 28, 2013
+ 
+ The Company issued 96,000 shares of common stock with a fair value of $45,120 to Gross Capital which was recorded as deferred compensation which will be expensed on the vesting date of July 1, 2013.
+
+ June 1, 2013
+ 
+ The Company issued 250,000 share purchase warrants at an exercise price of $0.50 per share expiring on May 31, 2014 to Les Matthews, a consultant. 
+
+Transfer Agent 
+
+Our transfer agent is
+President Stock Transfer, and is located at 515 West Pender Street, Suite 217, Vancouver, BC, V6B 6H5. The agent s telephone
+number is (604) 876-5526.
+
+The Offering
+
+As of September 2, 2013, there were 46,553,147
+shares of our common stock outstanding, of which 22,953,147 shares were held by non-affiliates. Although the Purchase Agreement
+provides that we may sell up to $7,500,000 of our common stock to Hanover, only 7,651,000 shares of our common stock are being
+offered under this prospectus, which represents (i) 1,890,000 shares of common stock
+
+that may be issued to Hanover upon conversion
+of the Convertible Note, (ii) 454,408 shares of common stock that we agreed to issue to Hanover as Initial Commitment Shares, (iii)
+a maximum of 545,592 shares of common stock that we may be required to issue to Hanover as Additional Commitment Shares and (iv)
+4,761,000 shares of common stock that we may issue to Hanover as Shares pursuant to draw downs under the Purchase Agreement. If
+all of the 7,651,000 shares offered under this prospectus were issued and outstanding as of September 2, 2013, such shares would
+represent approximately 14.1% of the total number of shares of our common stock outstanding and 25.0% of the total number of outstanding
+shares of our common stock held by non-affiliates, in each case as of September 2, 2013.
+
+ 
+
+At an assumed purchase price of $0.30 (equal
+to the closing price of our common stock of $0.30 on September 16, 2013), and assuming the sale by us to Hanover of all of the
+4,761,000 Shares, or approximately 10.2% of our issued and outstanding common stock, being registered hereunder pursuant to draw
+downs under the Purchase Agreement, we would receive only approximately $1,428,300 in gross proceeds. Furthermore, we may receive
+substantially less than $1,428,300 in gross proceeds from the financing due to our share price, discount to market and other factors
+relating to our common stock. If we elect to issue and sell more than the 4,761,000 Shares offered under this prospectus to Hanover,
+which we have the right, but not the obligation, to do, we must first register for resale under the Securities Act any such additional
+Shares, which could cause additional substantial dilution to our stockholders. Based on the above assumptions, we would be required
+to register an additional approximately 20,239,000 shares of our common stock to obtain the balance of $6,071,700 of the Total
+Commitment that would be available to us under the Purchase Agreement. We currently have authorized and available for issuance
+750,000,000 shares of our common stock pursuant to our charter. The number of shares of our common stock ultimately offered for
+resale by Hanover is dependent upon a number of factors, including the extent to which Hanover converts the Convertible Note into
+shares of our common stock and the number of Shares we ultimately issue and sell to Hanover under the Purchase Agreement.
+
+ 
+
+ 14
+
+ 
+
+ 
+
+The Total Commitment of $7,500,000 was determined based on numerous
+factors, including our estimated operating expenses for the next three years. While it is difficult to estimate the likelihood
+that we will need the full Total Commitment, we presently believe that we may need the full Total Commitment under the Purchase
+Agreement. 
+
+ 
+
+ 
+
+ Common stock offered by
+ Selling Stockholder
+ 7,651,000
+ shares of common stock, consisting of:
+
+ 
+
+ 1,890,000
+shares of common stock that we may issue to Hanover upon conversion of the Convertible Note;
+
+ 
+
+ 
+454,408 shares of common stock that we issued to Hanover as Initial Commitment Shares; 
+
+ 
+
+ a maximum of 545,592 shares of common stock that we may be required to issue to Hanover
+ as Additional Commitment Shares; and
+
+ 
+
+ 4,761,000 shares of common stock that we may issue to Hanover as Shares pursuant to draw
+downs under the Purchase Agreement.
+
+ 
+ 
+
+ Common stock outstanding before the
+ offering
+ 46,553,147 shares
+ of common stock.
+
+ 
+ 
+
+ Common stock outstanding after the
+ offering
+ 54,204,147 shares
+ of common stock.
+
+ 
+ 
+
+ Use of proceeds
+ We will not receive
+ any proceeds from the sale of shares by the selling stockholder. However, we have received gross proceeds of $300,000 from
+ the sale of the Convertible Note to Hanover and we may receive gross proceeds of up to $7,500,000 from the sale of Shares
+ to Hanover pursuant to the Purchase Agreement. The net proceeds received from the sale of the Convertible Note to Hanover
+ and from the sale of Shares pursuant to the Purchase Agreement will be used for general corporate and working capital purposes
+ and acquisitions or assets, businesses or operations or for other purposes that our Board of Directors, in its good faith
+ deem to be in the best interest of the company and its stockholders.
+
+ 
+ 
+
+ OTCQB Trading Symbol
+ SNWR
+
+ 
+ 
+
+ Risk Factors
+ The
+ common stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the
+ loss of their entire investment. See "Risk Factors".
+
+ 
+
+ 
+
+ 
+
+ 15
+
+SUMMARY OF FINANCIAL
+INFORMATION
+
+The following selected
+financial information is derived from the Company s Consolidated Financial Statements appearing elsewhere in this Prospectus
+and should be read in conjunction with the Company s Consolidated Financial Statements, including the notes thereto, appearing
+elsewhere in this Prospectus.
+
+Summary of Statements of Operations
+
+ 
+ Year Ended December 31, 2012
+ 
+ Nine Months Ended September 30, 2013 (unaudited)
+
+ 
+
+ 
+ Total Revenue
+
+ 
+
+ 
+ $0
+
+ 
+
+ 
+ $254,878
+
+ 
+
+ 
+ Net loss
+
+ 
+
+ 
+ $(464,429)
+
+ 
+
+ 
+ $(12,052,715)
+
+ 
+
+ 
+ Net loss per common share (basic and diluted)
+
+ 
+
+ 
+ $(0.46)
+
+ 
+
+ 
+ $(0.38)
+
+ 
+
+ 
+ Weighted average common shares
+
+ 
+
+ 
+ 1,004,540
+
+ 
+
+ 
+ 31,658,122
+
+ 
+
+ 
+
+Statement of Financial Position
+
+ 
+
+ 
+ As At
+
+December 31, 2012
+ 
+ As At
+
+ September 30, 2013 (unaudited)
+
+ 
+
+ 
+ Cash
+
+ 
+
+ 
+ $1,094
+
+ 
+
+ 
+ $2,753
+
+ 
+
+ 
+ Total current assets
+
+ 
+
+ 
+ $1,094
+
+ 
+
+ 
+ $249,694
+
+ 
+
+ 
+ Total assets
+
+ 
+
+ 
+ $1,094
+
+ 
+
+ $1,631,992 
+
+ 
+ Total current liabilities
+
+ 
+
+ 
+ $1,373,129
+
+ 
+
+ 
+ $2,300,281
+
+ 
+
+ 
+ Stockholders deficit
+
+ 
+
+ 
+ $(1,372,035)
+
+ 
+
+ 
+ $(8,958,705)
+
+ 
+
+ 
+ Total liabilities and stockholders deficit
+
+ 
+
+ 
+ $1,094
+
+ 
+
+ 
+ $1,631,992
+
+ 
+
+ 
+
+ 16
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001108967_orbital_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001108967_orbital_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001108967_orbital_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001132143_legend_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001132143_legend_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6a14c55090cc45149298dc9607fbf78da1cafe82
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001132143_legend_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained in the prospectus. This summary is not complete and does not contain all of the information that you should consider before deciding whether or not you should exercise your subscription rights. This summary highlights selected information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the more detailed information regarding our company, the risks of purchasing our common stock discussed under Risk Factors , and our financial statements and the accompanying notes, before making an investment decision Our Business Legend has been an exploration stage company since August 2006. During February 2011, the Company announced its maiden mineral reserve estimates for its 100% owned Paradise South phosphate project in accordance with SEC Industry Guide 7. As a result of establishing mineral reserve estimates, Legend has entered into the development stage for this project as it engages in the process of preparing the mineral deposit for extraction, while it continues with its other various exploration activities. Legend is primarily focused on the commencement of mining, beneficiation and processing of its 100% owned phosphate mineralization near Mount Isa in northwest Queensland, Australia. Legend has a phased implementation plan to become a leading supplier of phosphate fertilizers. Legend s phosphate assets, which are owned and operated by Legend s wholly-owned subsidiary, Paradise Phosphate Limited, or Paradise, consist of exploration and mining licenses which are grouped into projects called Paradise North, Paradise South, D-Tree and the Golden Cross Joint Venture project. Phosphate rock is the primary source of phosphorus, a mineral which is an essential building block for all life on Earth and it is a vital nutrient for humans, animals and plants. Being essential for life means that we need to consume phosphorus in our food. Approximately 90% of mined phosphate rock is used in the production of phosphate fertilizers which are needed to maintain the high crop yields required for world food production. Legend plans to market a range of phosphate fertilizers. Paradise s initial business objective is the development of the Paradise North project to mine and deliver phosphate Direct Shipping Ore ( DSO ) to potential customers in the Australasian and South Asian regions. DSO refers to ore which needs negligible processing to meet customer requirements, often needing only crushing and screening, before it can be used as feedstock for phosphate fertilizer manufacture or as a direct application fertilizer. The Paradise North Project has an estimate for capital expenditure of approximately A$26.4 million which is anticipated to provide all of the necessary infrastructure required to deliver phosphate DSO to the Port of Townsville. A bulk mining phosphate DSO operation requires minimal mine infrastructure and is based on contract mining. A majority of the capital expenditure is allocated to haul road upgrades and rail access security. Legend intends to use part of the net proceeds of the rights offering to advance the Paradise North Project. While Paradise is focused on near term production from the Paradise North project, its longer term business objective is to pursue additional growth opportunities by undertaking work to progress plans for the development of a phosphate beneficiation plant at the Paradise South project. Paradise aims to attract a strategic partner to finance the development of its phosphate mineralization. This could involve a range of possible transactions including entering into joint venture arrangements, accepting direct investment into the projects or the issue of new shares in Paradise. Concurrently, Paradise will also pursue exploration activity at the D-Tree and Golden Cross Joint Venture projects. The planned beneficiation plant will use phosphate rock from Paradise South as feedstock and is planned to have a capacity to produce up to 2Mt per year of phosphate concentrate. This product may be used as feedstock to manufacture high analysis phosphate fertilizers DAP (Diammonium Phosphate), MAP (Monoammonium Phosphate) and superphosphates. The manufacture and marketing of MAP and DAP fertilizers using feedstock from the Paradise South beneficiation plant is also being examined. A valuable by-product of DAP/MAP manufacture from Paradise South concentrate is Aluminum Fluoride (AlF3), an important input into the aluminum smelting process. Our principal executive office is located at Level 8, 580 St Kilda Road, Melbourne, Victoria 3004 Australia. Our telephone number at that address is 613-8532-2866. Our website is located at www.lgdi.net. Information contained on our web site does not constitute a part of this prospectus. The Rights Offering The following summary describes the principal terms of the rights offering, but is not intended to be complete. See the information under the heading The Rights Offering in this prospectus for a more detailed description of the terms and conditions of the rights offering. Securities Offered We are distributing, at no charge, to holders of our common stock non-transferable subscription rights to purchase up to 444,047,971 shares of our common stock. You will receive one subscription right for each share of common stock owned at 5:00 p.m., New York City time, on ___________, 2013. Subscription Privilege The subscription privilege of each subscription right will entitle you to purchase one (1) share of our common stock at a subscription price of $0.05 per share. Limitation on the Purchase of Shares Any stockholder may exercise subscription privileges to the extent that any such exercise is the result of rights as described herein and that the total number of shares sold by the Company does not exceed 444,047,971 shares. Standby Purchase Agreement We have entered into a standby purchase agreement with Perfectus under which Perfectus has agreed to purchase 200 million shares of common stock not otherwise purchased by our stockholders in the subscription rights, at the subscription price of $0.05, totalling $10 million ( Standby Purchase Quantity). In addition, Perfectus has been granted an option to purchase the balance of any shares not subscribed for by shareholders under the rights issue and after the purchase of the Standby Purchase Quantity ( Option Quantity ). The consideration for the Option Quantity is $0.05 per share. Mr Joseph Gutnick, our Chairman, President and Chief Executive Officer, holds 50% of the shares and is a director of Perfectus. An independent third party to Legend and Mr Gutnick holds the other 50% of the shares of Perfectus and the second director of Perfectus is independent of Legend and Mr Gutnick. Perfectus has agreed to acquire from us the shares of common stock issuable upon exercise of the unexercised rights, at the same subscription price of $0.05 and other terms and conditions as the rights offering stockholders. Record Date 5:00 p.m., New York City time, on ___________, 2013. Expiration of the Rights Offering 5:00 p.m., New York City time, on ___________, 2013. Subscription Price $0.05 per full share, payable in cash. To be effective, any payment related to the exercise of a right must clear prior to the expiration of the rights offering. Use of Proceeds We intend to use the net proceeds to develop our phosphate assets and for general corporate purposes. See Use of Proceeds . Non-Transferability of Rights The subscription rights may not be sold, transferred or assigned and will not be listed for trading on any stock exchange or market, including the OTCQB marketplace or the OTC Bulletin Board. No Board Recommendation Our board of directors is making no recommendation regarding your exercise of the subscription rights. You are urged to make your decision based on your own assessment of our business and the rights offering. Please see Risk Factors for a discussion of some of the risks involved in investing in our common stock. No Revocation All exercises of subscription rights are irrevocable, even if you later learn information that you consider to be unfavorable to the exercise of your subscription rights and even if the rights offering is extended by our board of directors. However, if we amend the rights offering to allow for an extension of the rights offering for a period of more than 30 days or make a fundamental change to the terms set forth in this prospectus, you may cancel your subscription and receive a refund of any money you have advanced. You should not exercise your subscription rights unless you are certain that you wish to purchase additional shares of our common stock at a subscription price of $0.05 per full share. U.S. Federal Income Tax Considerations For U.S. federal income tax purposes, you generally should not recognize income or loss in connection with the receipt or exercise of subscription rights. This position is not binding on the IRS or the courts, however. You are urged to consult your own tax advisor as to your particular tax consequences resulting from the receipt and exercise of subscription rights and the receipt, ownership and disposition of our common stock. For further information, please see Material U.S. Federal Income Tax Consequences. Extension, Cancellation and Amendment We have the option to extend the rights offering and the period for exercising your subscription rights for a period not to exceed 30 days, although we do not presently intend to do so. If we elect to extend the expiration of the rights offering, we will issue a press release announcing such extension no later than 9:00 a.m., New York City time, on the next business day after the most recently announced expiration of the rights offering. We will extend the duration of the rights offering as required by applicable law or regulation and may choose to extend it if we decide to give investors more time to exercise their subscription rights in this rights offering. If we elect to extend the rights offering for a period of more than 30 days, then holders who have subscribed for rights may cancel their subscriptions and receive a refund of all money advanced. Our board of directors may cancel the rights offering at any time prior to the expiration of the rights offering for any reason. In the event that the rights offering is cancelled, we will issue a press release notifying stockholders of the cancellation and all subscription payments received by the subscription agent will be returned, without interest or penalty, as soon as practicable. Our board of directors also reserves the right to amend or modify the terms of the rights offering. If we should make any fundamental changes to the terms set forth in this prospectus, we will file a post-effective amendment to the registration statement in which this prospectus is included, offer potential purchasers who have subscribed for rights the opportunity to cancel such subscriptions and issue a refund of any money advanced by such stockholder and recirculate an updated prospectus after the post-effective amendment is declared effective with the SEC. In addition, upon such event, we may extend the expiration date of this rights offering to allow holders of rights ample time to make new investment decisions and for us to recirculate updated documentation. Promptly following any such occurrence, we will issue a press release announcing any changes with respect to this rights offering and the new expiration date. The terms of the rights offering cannot be modified or amended after the expiration date of the rights offering. Although we do not presently intend to do so, we may choose to amend or modify the terms of the rights offering for any reason, including, without limitation, in order to increase participation in the rights offering. Such amendments or modifications may include a change in the subscription price although no such change is presently contemplated. Procedures for Exercising Rights To exercise your subscription rights, you must complete the rights certificate and deliver it to the subscription agent, Continental Stock Transfer & Trust Company, together with full payment for all the subscription rights you elect to exercise under the subscription privilege. You may deliver the documents and payments by mail or commercial carrier. If regular mail is used for this purpose, we recommend using registered mail, properly insured, with return receipt requested. Subscription Agent and Information Agent Continental Stock Transfer & Trust Company 17 Battery Place, 8th Floor New York NY 10004 USA Shares Outstanding Before the Rights Offering 444,047,971 shares of our common stock were outstanding as of August, 2013. Shares Outstanding After Completion of the Rights Offering We expect to issue a minimum of 200,000,000 shares and a maximum of 444,047,971 shares of our common stock in this rights offering. Assuming no options are exercised prior to the expiration of the rights offering, we anticipate that we will have a minimum of 644,047,971 shares and a maximum of 888,095,942 shares of our common stock outstanding immediately after completion of the rights offering. Fees and Expenses We will pay the fees and expenses related to the rights offering. OTCQB Marketplace Trading Symbol Shares of our common stock are traded on the OTCQB marketplace under the symbol LGDI. Questions If you have any questions about the rights offering, including questions about subscription procedures and requests for additional copies of this prospectus or other documents, please contact Continental Stock Transfer & Trust Company.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001143921_vantagesou_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001143921_vantagesou_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..09631119ae05113006d991e6e250a885a3680ab6
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001143921_vantagesou_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary highlights selected information contained elsewhere or incorporated by reference in this prospectus and does not contain all the information that you need to consider in making your investment decision. You should carefully read this entire prospectus, as well as the information to which we refer you and the information incorporated by reference herein, before deciding whether to invest in the Preferred Stock. You should pay special attention to the Risk Factors section of this prospectus and the documents incorporated by reference herein and therein to determine whether an investment in the Preferred Stock is appropriate for you. The Company VantageSouth Bancshares, Inc. (hereinafter referred to as the Company or VSB ), is a bank holding company incorporated under the laws of Delaware in 2011. On July 22, 2013, after receiving stockholder approval, we changed the Company s name from Crescent Financial Bancshares, Inc. to VantageSouth Bancshares, Inc., and transferred the listing of our common stock from the NASDAQ Stock Market, LLC to the NYSE MKT. The Company conducts its business operations primarily through its commercial bank subsidiary, VantageSouth Bank (formerly known as Crescent State Bank). Our principal executive office is located at 3600 Glenwood Avenue, Suite 300, Raleigh, North Carolina 27612 and our telephone number is (919) 659-9000. VSB is a subsidiary of Piedmont Community Bank Holdings, Inc. ( Piedmont ), a registered bank holding company. At June 30, 2013, we had assets of $2 billion, deposits of $1.65 billion and stockholders equity of $230 million. VantageSouth Bank (the Bank ) was incorporated in 1998 as a North Carolina-chartered commercial bank. The Bank serves central North Carolina to the coast with 46 full-service branch offices located in Apex, Avon, Burlington (2), Cary (2), China Grove, Clayton, Columbia, Creswell, Currituck, Engelhard, Fairfield, Fayetteville, Garner, Greenville (3), Hatteras, Hertford, Holly Springs, Jacksonville, Knightdale, Leland, Manteo, Morehead City, Nags Head, New Bern, Ocean Isle Beach, Ocracoke, Pinehurst, Raleigh (3), Salisbury, Sanford, Southern Pines, Southern Shores, Swan Quarter, Washington, Williamston, Wilmington (4), and Winterville, North Carolina. The Bank is a community bank focused on being the bank of choice for businesses, business owners, and professionals in its markets. The Bank aims to accomplish this by creating mutually beneficial and robust relationships with its customers and positively impacting its communities. In addition to offering standard banking products and services, the Bank seeks to build relationships with its customers by understanding their personal and business challenges and goals, and providing tangible solutions. The Bank offers a broad range of banking services, including checking and savings accounts, individual retirement accounts, certificates of deposit, money market accounts, commercial, consumer and personal loans, mortgage banking services, U.S. Small Business Administration ( SBA ) loans, builder finance, agricultural finance and other associated financial services. These banking services are offered through the Bank s branch network and certain services are offered through its online banking and mobile banking platforms. As a bank holding company, we are subject to the supervision of the Board of Governors of the Federal Reserve System (the Federal Reserve Board ). We are required to file with the Federal Reserve reports and other information regarding our business operations and the business operations of our subsidiaries. As a North Carolina-chartered bank, the Bank is subject to primary supervision, periodic examination and regulation by the Office of the North Carolina Commissioner of Banks (the NCCOB ), and by the FDIC as its primary federal regulator. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED OCTOBER 2, 2013 PRELIMINARY PROSPECTUS 2,000,000 Shares of Fixed/Floating Rate Perpetual Non-Cumulative Preferred Stock $[ ] Per Share We are offering 2,000,000 shares of our fixed/floating rate perpetual non-cumulative preferred stock, with a liquidation preference of $25 per share (the Preferred Stock ). The underwriters have an option to purchase 300,000 additional shares of Preferred Stock in this offering. We intend to pay dividends on the Preferred Stock, when, as, and if declared by our board of directors or a duly authorized committee thereof. From the date of issuance to, but excluding, [ ], we intend to pay dividends, when, as, and if declared by our board of directors or such committee at a rate of [ ]% per annum, payable on a non-cumulative basis quarterly, in arrears, on [ ], [ ], [ ] and [ ] of each year beginning on [ ] and ending on [ ]. From and including [ ], we intend to pay dividends, when, as, and if declared by our board of directors or such committee at a floating rate equal to three-month LIBOR plus a spread of [ ]% per annum, payable quarterly, in arrears, on [ ], [ ], [ ] and [ ] of each year, beginning on [ ]. If our board of directors or a duly authorized committee of the board has not declared a dividend on the Preferred Stock before the dividend payment date for any dividend period, such dividend shall not be cumulative and shall not accrue or be payable for such dividend period, and we will have no obligation to pay dividends for such dividend period, whether or not dividends on the Preferred Stock are declared for any future dividend period. We may redeem shares of the Preferred Stock (i) on any dividend payment date on or after [ ], in whole or in part, from time to time or (ii) prior to [ ], in whole, but not in part, upon the occurrence of a regulatory capital treatment event, as described herein, in each case at a redemption price equal to $25 per share, plus any declared and unpaid dividends on the shares of Preferred Stock called for redemption. The Preferred Stock will not have any voting rights, except as described under Description of the Preferred Stock Voting Rights below. Application has been made to list the Preferred Stock on the NYSE MKT, LLC (the NYSE MKT ) under the symbol VSB PR. If the application is approved, trading of the Preferred Stock is expected to commence within a 30-day period after the original issuance date of the Preferred Stock. Our common stock is listed on the NYSE MKT under the symbol VSB. The shares of Preferred Stock will be capital stock of VantageSouth Bancshares, Inc. and will not be equivalent to savings accounts, deposits or other obligations of any of our bank or non-bank subsidiaries and will not be insured or guaranteed by the FDIC or any other governmental agency or instrumentality. Investing in the Preferred Stock involves risks. See Risk Factors beginning on page 18 to read about factors you should consider before buying the Preferred Stock. Neither the Securities and Exchange Commission ( SEC ) nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Public offering price (1) $ [ ] $ [ ] Underwriting discounts and commissions $ [ ] $ [ ] Proceeds to us, before expenses (2) $ [ ] $ [ ] (1) The public offering price does not include dividends, if any, that may be declared. Dividends, if declared, will be calculated from the date of original issuance, which is expected to be [ ], 2013. (2) Estimated expenses for the offering are approximately $[ ]. The underwriters expect to deliver the Preferred Stock in book-entry form only through the facilities of The Depository Trust Company ( DTC ) against payment in New York, New York on or about [ ], 2013. Prospectus dated [ ], 2013. Table of Contents ABOUT THIS PROSPECTUS You should rely only on the information contained or incorporated by reference in this prospectus. We have not, and the underwriters have not, authorized any person to provide you with different or inconsistent information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus and the documents incorporated by reference is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed since such dates. Unless otherwise indicated or unless the context requires otherwise, all references in this prospectus to VSB, we, us, our, the Company, or similar references, mean VantageSouth Bancshares, Inc. and its subsidiaries on a consolidated basis. References to VantageSouth Bank or the Bank mean our wholly-owned banking subsidiary. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Information set forth in this prospectus and the information it incorporates by reference may contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act ), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act ), which statements represent our judgment concerning the future and are subject to business, economic and other risks and uncertainties, both known and unknown, that could cause our actual operating results and financial position to differ materially from the forward-looking statements. Such forward-looking statements can be identified by the use of forward-looking terminology such as may, will, expect, anticipate, estimate, believe, or continue, or the negative thereof or other variations thereof or comparable terminology. We caution that any such forward-looking statements are further qualified by important factors that could cause our actual operating results to differ materially from those in the forward-looking statements, including without limitation: deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; the failure of assumptions underlying the establishment of reserves for possible loan losses; changes in accounting principles, policies, and guidelines applicable to bank holding companies and banking; changes in political and economic conditions, including continuing political and economic effects of the global economic downturn and other major developments, including the ongoing war on terrorism, continued tensions in the Middle East, and the economic challenges facing the European Union and other developed countries; changes in financial market conditions, either internationally, nationally or locally in areas in which we conduct our operations, including, without limitation, reduced rates of business formation and growth, commercial and residential real estate development, and real estate prices; our ability to comply with any requirements imposed on VSB or the Bank by our respective regulators, and the potential negative consequences that may result; the impact of heightened regulatory scrutiny of financial products aimed at consumers, led by the Consumer Financial Protection Bureau ( CFPB ); Table of Contents Additional information about us is included in our filings with the SEC, which are incorporated by reference into this prospectus. See Where You Can Find More Information and Incorporation of Certain Documents By Reference in this prospectus. Our History Piedmont Established Piedmont was established in 2009 for the purpose of building a community banking franchise in the North Carolina, South Carolina, and Virginia markets. Piedmont was co-founded by J. Adam Abram and Steven J. Lerner. Piedmont received approval to become a bank holding company on January 20, 2010 through its acquisition of VantageSouth Bank ( Legacy VantageSouth ). Piedmont Acquisition of Legacy VantageSouth Legacy VantageSouth was organized and incorporated under the laws of the State of North Carolina and commenced operations in 2006. Piedmont recapitalized Legacy VantageSouth on February 19, 2010. Prior to its merger with Crescent State Bank on November 30, 2012, Legacy VantageSouth was headquartered in Burlington, North Carolina. Legacy VantageSouth initially sold 1,768,794 shares of its newly issued Series A Convertible Perpetual Preferred Stock (the Series A Stock ) to Piedmont for an aggregate price of $7.7 million, or $4.35 per share. The Series A Stock was convertible at any time on a one-for-one basis into shares of Legacy VantageSouth s common stock, which totaled approximately 62 percent of its outstanding common stock at the date of Piedmont s investment (as adjusted for the assumed conversion of the Series A Stock). The investment in Legacy VantageSouth gave Piedmont voting control over a majority of Legacy VantageSouth s outstanding common stock and the ability to control the election of Legacy VantageSouth s board of directors. Piedmont Acquisition of Community Bank of Rowan and Merger of Community Bank of Rowan into Legacy VantageSouth On April 19, 2011, Piedmont acquired Community Bank of Rowan, a North Carolina-chartered bank ( Rowan ). Piedmont purchased all 813,083 shares of Rowan s common stock for an aggregate purchase price of $9.5 million. Immediately following the acquisition, Piedmont purchased an additional 569,158 shares of newly issued Rowan common stock for an aggregate price of $7.0 million. Since Piedmont owned 100 percent of Rowan following its acquisition, purchase accounting fair value adjustments were pushed down to Rowan s financial statements at that date. In addition, Legacy VantageSouth and Rowan became commonly controlled by Piedmont beginning on the date of Piedmont s acquisition of Rowan. On February 1, 2012, a transaction was completed whereby Piedmont purchased the remaining non-controlling interests in Legacy VantageSouth and simultaneously merged Rowan into Legacy VantageSouth. Piedmont purchased all remaining shares of Legacy VantageSouth common stock from non-controlling stockholders for an aggregate purchase price of $4.8 million, or $4.35 per share. Following this transaction, Piedmont wholly owned the combined Legacy VantageSouth (except for certain shares, known as directors qualifying shares, required to be owned by members of the board of directors of Legacy VantageSouth pursuant to North Carolina banking laws then in effect). Because Piedmont purchased the remaining non-controlling common stock of Legacy VantageSouth with this transaction, push-down accounting was applied to Legacy VantageSouth so that the basis reported in Legacy VantageSouth s financial statements from that date forward reflected Piedmont s basis in Legacy VantageSouth. The merger of Rowan into Legacy VantageSouth was a merger of commonly controlled companies and was accounted for in a manner similar to a pooling of interests transaction. Table of Contents Table of Contents fluctuations in markets for equity, fixed-income, commercial paper and other securities, which could affect availability, market liquidity levels, and pricing; governmental monetary and fiscal policies, including the effects of the Federal Reserve s Quantitative Easing program, as well as other legislative and regulatory changes; effective on January 1, 2015 and subject to certain transition periods, changes in minimum capital requirements, adjustments to prompt corrective action thresholds, increased quality of regulatory capital, revised risk-weighting of certain assets, and implementation of a capital conservation buffer, included in the final rule promulgated by the Federal Reserve on July 2, 2013, to implement the so-called Basel III accords; the risks of changes in interest rates or an extended period of record-low interest rates on the level and composition of deposits, loan demand and the values of loan collateral, securities and interest sensitive assets and liabilities; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone and the internet; the effect of any mergers, acquisitions or other transactions, to which we or our subsidiary bank may from time to time be a party, including, without limitation, our ability to successfully integrate any businesses that we acquire; and the risk factors described under the heading Risk Factors in this prospectus and in the documents incorporated herein by reference. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date such forward-looking statements are made. You should read carefully this prospectus, together with the information incorporated herein by reference as described under the heading Where You Can Find More Information, completely and with the understanding that our actual future results may be materially different from what we expect. We hereby qualify all of our forward-looking statements by these cautionary statements. Except as required by law, we assume no obligation to update these forward-looking statements publicly or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Table of Contents Piedmont Acquisition of Crescent Financial Bancshares, Inc. Crescent Financial Corporation was a North Carolina business corporation and the bank holding company for Crescent State Bank, a North Carolina chartered bank incorporated in 1998 and headquartered in Cary, North Carolina. Crescent State Bank operated fifteen full-service branches in central North Carolina and Wilmington, North Carolina. On February 23, 2011, Crescent Financial Corporation and Crescent State Bank entered into an investment agreement with Piedmont, pursuant to which Piedmont agreed to purchase 18,750,000 newly issued shares of common stock of Crescent Financial Corporation for $75.0 million in cash, or $4.00 per share. Piedmont also agreed to commence a tender offer to purchase up to 6,442,105 shares of Crescent Financial Corporation s then-outstanding common stock at a price of $4.75 per share (the Tender Offer ). On November 15, 2011, Crescent Financial Corporation reincorporated as a Delaware corporation through a merger of Crescent Financial Corporation with and into Crescent Financial Bancshares, Inc. ( Crescent Financial ), a newly formed Delaware corporation and wholly owned subsidiary of Crescent Financial Corporation. Crescent Financial was the surviving entity after the reincorporation merger. On November 18, 2011, Crescent Financial completed the issuance and sale to Piedmont of 18,750,000 shares of its common stock. Piedmont also purchased 6,128,423 shares of Crescent Financial common stock on December 22, 2011, pursuant to the Tender Offer. As a result of Piedmont s investment and the Tender Offer, Piedmont acquired approximately 88% of the outstanding common stock of Crescent Financial. Crescent Financial s financial condition and results of operations were significantly impacted by Piedmont s investment. Because of the level of Piedmont s ownership and control following the controlling investment, push-down accounting was applied. Accordingly, Crescent Financial s assets, liabilities and non-controlling interests were adjusted to estimated fair value at the acquisition date, and the allowance for loan losses was eliminated. Merger of Legacy VantageSouth into Crescent Financial and Change in Reporting Entity On November 30, 2012, Crescent Financial completed the merger of Legacy VantageSouth into Crescent State Bank in a share exchange. All outstanding Legacy VantageSouth shares of common stock were converted into Crescent Financial s shares at a 5.3278 exchange ratio for a total transaction value of $35.0 million. At the time of merger, Piedmont owned all outstanding shares of Legacy VantageSouth except for directors qualifying shares. Piedmont owned approximately 90 percent of the Company s outstanding common stock following the merger. The Company re-branded its wholly-owned banking subsidiary as VantageSouth Bank immediately following the merger. The merger of Legacy VantageSouth into Crescent State Bank was a merger of commonly controlled companies and was accounted for in a manner similar to a pooling of interests transaction. Thus, the Company s financial statements have been retrospectively adjusted to combine the financial statement balances of Crescent Financial and Legacy VantageSouth beginning on November 18, 2011, the date the two companies became commonly controlled by Piedmont. In addition, periods prior to the date of common control in this document reflect only Legacy VantageSouth s historical balances since it was the first company acquired by Piedmont, which resulted in a change in reporting entity. Merger with ECB Bancorp, Inc. On April 1, 2013, the Company completed the merger of ECB Bancorp, Inc. ( ECB ), a bank holding company headquartered in Engelhard, North Carolina, with and into the Company, and the merger of ECB s subsidiary bank, The East Carolina Bank, with and into the Bank. Under the terms of the merger agreement, shareholders of ECB received 3.55 shares of the Company s common stock for each share of ECB common stock. The aggregate merger consideration consisted of 10,312,186 shares of the Company s Table of Contents common stock. Based upon the market price of the Company s common stock at merger, the transaction value was $40.6 million. Following the ECB merger, Piedmont owned approximately 70% of the Company s outstanding common stock. The East Carolina Bank had twenty-five branch offices in eastern North Carolina stretching from the Virginia to South Carolina state lines east of Interstate 95. The East Carolina Bank offered a full range of financial services, including community banking, mortgage and agricultural banking. Our Markets Management views the Company s target market area for both organic and acquisition growth as the Interstate 85 growth corridor, which has been identified by demographers as a key U.S. mega region for the next 40 years. This corridor includes areas in North Carolina, South Carolina and Virginia. North Carolina has been the number one state in the U.S. for corporate relocations in eight out of the last nine years according to Site Selection magazine. North Carolina s population of 9.8 million is projected by the U.S. Census Bureau to grow by 3.0 million people, or 31%, by 2030. North Carolina is currently the tenth largest state in the U.S. and is projected to be the seventh largest state by 2030. The Company s franchise is concentrated in North Carolina s top metropolitan statistical areas ( MSAs ). Half of our deposit base is located in North Carolina s top ten MSAs with projected growth well in excess of national averages for the next five years. The Raleigh-Cary, North Carolina MSA, which is the heart of the Company s footprint and includes 28.2% of our deposits, is the fifth fastest growing MSA in the U.S. with projected population growth of 12.9% from 2012 to 2017. Raleigh is the state capital and is geographically positioned in the center of the state. Intersected by I-40 and adjacent to I-85 and I-95, Raleigh s strategic location has contributed greatly to its growth and commercial appeal. Raleigh is located in the Triangle area of North Carolina (the Triangle ), which also includes Durham, Chapel Hill, and the Research Triangle Park. The Triangle is a well-diversified market with a mixture of businesses, universities, large medical institutions and state/local government offices providing for a stable local economy. The University of North Carolina, Duke University and North Carolina State University are all located in the Triangle and the Research Triangle Park is home to more than 170 global companies, including IBM, GlaxoSmithKline, Syngenta, RTI International, Credit Suisse, and Cisco, that foster a culture of scientific advancement and competitive excellence. In March 2013, Forbes magazine reported that the population for the Raleigh MSA has expanded 47.8% since 2000, tops among the nation s 52 metropolitan areas that have a population of more than 1 million. This growth is primarily driven by the education, technology, healthcare and state government sectors. In February 2013, The National Federation of Independent Businesses placed Raleigh second on its list of best cities in which to start a business. The Company s other top-growth MSAs in North Carolina are Wilmington, Greenville, Burlington, and Southern Pines-Pinehurst, which represent 26.5% of its deposit franchise and have a weighted average projected population growth of 7.9% for the next five years. The Company continues to expand into other high-growth MSAs. The Company recently expanded into the Fayetteville, NC and Jacksonville, NC MSAs with weighted average population projected growth of 9.4% for the next five years. Fayetteville and Jacksonville are home to Fort Bragg and Camp Lejeune, respectively. Fort Bragg is the largest global Army installation with 10% of the Army s active forces and Camp Lejeune is the largest Marine Corps base on the East Coast. Table of Contents Our Experienced Executive Management Team and Highly Qualified Board of Directors Our executive management team consists of five seasoned banking professionals who have over 125 years of combined experience with an average of over 25 years experience each in the financial services industry. Scott M. Custer has served as a director and Chief Executive Officer of Piedmont since 2010 and a director and Chief Executive Officer of VSB and the Bank since November 2011. Before joining Piedmont, he served as Chairman and Chief Executive Officer of RBC Bank (USA), a position he held since 2004. We believe that our executive officers experience and local market knowledge are valuable assets in turbulent economic times, and will enable them to guide the Company successfully in the future. In addition to our seasoned executive management team, our board of directors consists of highly qualified and respected members of the communities that we serve, and many of them own businesses in their local communities. Our executive management team and members of our board of directors own a significant amount of our stock, as described below: Name Title Years Experience Prior Experience VSB Ownership % (1) Employer Position Adam Abram Chairman of the Board 30 Franklin Holdings Chairman 5.0 % James River Group Chief Executive Officer Scott Custer Chief Executive Officer 31 RBC Bank Chief Executive Officer 1.8 % RBC Centura President Lee Roberts Chief Operating Officer 19 Morgan Stanley Executive Director 0.7 % Chief Risk Officer Business Unit COO Steve Jones Bank President 19 RBC Bank President Carolinas 0.6 % Terry Earley Chief Financial Officer 30 RBC Bank Chief Financial Officer 0.5 % Chief Operating Officer Board & Executives 50.0 % (1) This includes both beneficial ownership of VSB common stock and Piedmont common stock based upon beneficial ownership concepts described in the rules issued under the Exchange Act. VSB ownership including fully diluted Piedmont ownership is calculated by multiplying each beneficial owner s fully diluted ownership percentage of Piedmont by the 32,242,726 shares of VSB stock which Piedmont owns. Table of Contents Recent Developments Highlights of Second Quarter of 2013 Net income was $3.7 million in the second quarter of 2013 compared to a net loss of $806,000 in the first quarter of 2013 and net income of $338,000 in the second quarter of 2012. Operating earnings, which excludes securities gains, a one-time acquisition gain, and merger and conversion costs, were $2.8 million in the second quarter of 2013 compared to a loss of $422,000 in the first quarter of 2013 and earnings of $360,000 in the second quarter of 2012. The Company completed the merger and system conversion of ECB in the second quarter of 2013. The ECB merger generated a one-time gain of $8.2 million in the second quarter of 2013, while merger and system conversion costs totaled $12.0 million in the second quarter of 2013 compared to $1.6 million in the first quarter of 2013 and $6,000 in the second quarter of 2012. Annualized net loan growth was approximately 24 percent in the second quarter of 2013, excluding acquired ECB loans, which was driven by loan originations of $154.2 million. Net interest margin expanded to 4.67 percent in the second quarter of 2013 from 4.24 percent in the first quarter of 2013 and 4.33 percent in the second quarter of 2012. Operating non-interest income, which excludes a one-time acquisition gain, increased to $4.9 million in the second quarter of 2013 as the Company continued to expand its government guaranteed lending and mortgage businesses and acquired a merchant banking platform and expanded its deposit-related fee income base through the ECB merger. Asset quality continued to improve as nonperforming assets decreased to 1.33 percent of total assets as of June 30, 2013 from 1.48 percent of total assets as of March 31, 2013 and 1.71 percent of total assets as of December 31, 2012. Operating efficiency, which represents operating expenses to total operating revenues, improved to 75.9 percent in the second quarter of 2013 from 82.5 percent in the first quarter of 2013 and 82.8 percent in the second quarter of 2012. Reconciliation of Non-GAAP Financial Measures Statements included in Highlights of Second Quarter of 2013 above include non-GAAP financial measures and should be read along with the table below which provides a reconciliation of non-GAAP financial measures to GAAP financial measures. Our management uses non-GAAP financial measures, including: (i) net operating earnings (loss), (ii) operating non-interest income, and (iii) operating efficiency ratio, in its analysis of the Company s performance. Net operating earnings (loss) excludes the following from net income (loss): securities gains, a one-time acquisition gain, merger and conversion costs, and the income tax effect of adjustments. Operating non-interest income excludes a one-time acquisition gain from non-interest income. The operating efficiency ratio excludes a one-time acquisition gain and merger and conversion costs from the efficiency ratio. Table of Contents Our management believes that non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the Company. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and you should consider the Company s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP financial measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of the Company s results or financial condition as reported under GAAP. Three Months Ended (Dollars in thousands) June 30, 2013 March 31, 2013 June 30, 2012 Reconciliation of GAAP to Non-GAAP OPERATING EARNINGS Net income (loss) (GAAP) $ 3,700 $ (806 ) $ 338 Securities (gains) losses (123 ) (1,092 ) 27 Gain on acquisition (8,241 ) Merger and conversion costs 11,961 1,601 6 Income tax effect of adjustments (4,484 ) (125 ) (11 ) Net operating earnings (loss) (Non-GAAP) $ 2,813 $ (422 ) $ 360 OPERATING NON-INTEREST INCOME Non-interest income (GAAP) $ 13,096 $ 3,462 $ 2,390 Gain on acquisition (8,241 ) Operating non-interest income (Non-GAAP) $ 4,855 $ 3,462 $ 2,390 OPERATING EFFICIENCY RATIO Efficiency ratio (GAAP) 92.89 % 94.49 % 82.89 % Effect to adjust for gain on acquisition 30.28 % % % Effect to adjust for merger and conversion costs (47.31 )% (11.94 )% (0.04 )% Operating efficiency ratio (Non-GAAP) 75.86 % 82.55 % 82.85 % Offering of Subordinated Notes On August 12, 2013 and August 14, 2013, we entered into Subordinated Note Purchase Agreements with twelve accredited investors pursuant to which we issued an aggregate of $38,050,000 of subordinated notes (the Notes ) to the accredited investors. The Notes have a term of ten years and a maturity date of August 12, 2023. The Notes bear interest, payable on the 1st of January and July of each year, commencing January 1, 2014, at a fixed interest rate of 7.625% per year. We chose to conduct this offering of the Preferred Stock rather than raise additional capital through the offering of additional Notes because we expect the Preferred Stock to qualify as tier 1 capital to the Company, while the Notes would not qualify as tier 1 capital. The Notes are not convertible into common stock or preferred stock, and the Notes are not callable by the Company or subject to prepayment at the option of the holders. If certain events of default occur, including bankruptcy of the Company, the holder of a Note may declare the principal amount of the Note to be due and immediately payable. The Notes are unsecured, subordinated obligations of the Company and rank junior in right of payment to our senior indebtedness and to our obligations to our general creditors. The Notes rank senior to the Preferred Stock. Table of Contents The Notes are intended to qualify as tier 2 capital for regulatory purposes. We have contributed $32 million of the net proceeds from the sale of the Notes to the Bank. The Notes were offered and sold in reliance on the exemptions from registration provided by Section 4(2) of the Securities Act and Rule 506 of Regulation D thereunder. Accordingly, the Notes were offered and sold exclusively to persons who are accredited investors within the meaning of Rule 501(a) of Regulation D. The Offering The following summary contains basic information about the Preferred Stock offered hereby and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the Preferred Stock, you should read the section of this prospectus entitled Description of the Preferred Stock beginning on page [ ]. Securities offered hereby 2,000,000 shares of our Fixed/Floating Rate Perpetual Non-Cumulative Preferred Stock, with a liquidation preference of $25 per share (the Preferred Stock ). Option to purchase additional shares The underwriters will have an option to purchase 300,000 additional shares of Preferred Stock in this offering. Further issuances We reserve the right to re-open this series of Preferred Stock and issue additional shares of the Preferred Stock either through public or private sales at any time and from time to time. The additional shares would form a single series with the Preferred Stock offered by this prospectus. Public offering price $[ ] per share. Dividends We intend to pay dividends on the Preferred Stock, when, as, and if declared by our board of directors or a duly authorized committee thereof. From the date of issuance to, but excluding, [ ], we intend to pay dividends, when, as, and if declared by our board of directors or such committee at a rate of [ ]% per annum, payable on a non-cumulative basis quarterly, in arrears, on [ ], [ ], [ ] and [ ] of each year beginning on [ ] and ending on [ ]. From and including [ ], we intend to pay dividends, when, as, and if declared by our board of directors or such committee at a floating rate equal to three-month LIBOR plus a spread of [ ]% per annum, payable quarterly, in arrears (each such rate, a dividend rate ). Dividends on the Preferred Stock will not be cumulative. Accordingly, if our board of directors or a duly authorized committee thereof has not declared a dividend on the Preferred Stock before the dividend payment date for any dividend period, such dividend will not be cumulative and shall cease to accrue and be payable, and we will have no obligation to pay dividends accrued for such dividend period, whether or not dividends on the Preferred Stock are declared for any future dividend period. Table of Contents Our ability to declare and pay dividends is limited by applicable regulatory restrictions, including the regulations and guidelines of the Federal Reserve Board applicable to bank holding companies. In addition, because we are a bank holding company, our ability to pay dividends on, and redeem at our option, the Preferred Stock will be highly dependent upon the receipt of dividends, fees and other amounts from the Bank, which, in turn, will be highly dependent upon the Bank s historical and projected results of operations, liquidity, cash flows and financial condition, as well as various legal and regulatory prohibitions and other restrictions on the ability of the Bank to pay dividends, extend credit or otherwise transfer funds to the Company. Our right to participate in any distribution of assets of any of our subsidiaries upon their respective liquidation or reorganization will be subject to the prior claims of the creditors (including any depositors) and preferred equity holders of the applicable subsidiary, except to the extent that we are a creditor, and are recognized as a creditor, of such subsidiary. Accordingly, the holders of the Preferred Stock will be structurally subordinated to all existing and future obligations and preferred equity of our subsidiaries. We currently have no plans to issue any such debt or equity. During any dividend period in which the Preferred Stock is outstanding, unless, in each case, the full dividends for the then-current dividend period on all outstanding shares of Preferred Stock have been declared and paid or declared and a sum sufficient for the payment thereof has been set aside: no dividend will be declared or paid or set aside for payment and no distribution will be declared or made or set aside for payment on any junior stock, other than: a dividend payable solely in junior stock and cash in lieu of fractional shares in connection with such dividend; or any dividend in connection with the implementation of a shareholders rights plan, or the redemption or repurchase of any rights under any such plan; no shares of junior stock shall be repurchased, redeemed or otherwise acquired for consideration by us, directly or indirectly (nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by us) other than: as a result of a reclassification of junior stock for or into other junior stock; the exchange or conversion of one share of junior stock for or into another share of junior stock; through the use of the proceeds of a substantially contemporaneous sale of other shares of junior stock; Table of Contents purchases, redemptions or other acquisitions of shares of junior stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants; purchases of shares of junior stock pursuant to a contractually binding requirement to buy junior stock existing prior to the preceding dividend period, including under a contractually binding stock repurchase plan; or the purchase of fractional interests in shares of junior stock pursuant to the conversion or exchange provisions of such stock or the security being converted or exchanged; and no shares of parity stock shall be repurchased, redeemed or otherwise acquired for consideration by us otherwise than pursuant to pro rata offers to purchase all, or a pro rata portion, of the Preferred Stock and such parity stock other than: as a result of a reclassification of parity stock for or into other parity stock; the exchange or conversion of one share of parity stock for or into another share of parity stock; through the use of the proceeds of a substantially contemporaneous sale of other shares of parity stock; purchases, redemptions or other acquisitions of shares of parity stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants; purchases of shares of parity stock pursuant to a contractually binding requirement to buy parity stock existing prior to the preceding dividend period, including under a contractually binding stock repurchase plan; the purchase of fractional interests in shares of parity stock pursuant to the conversion or exchange provisions of such stock or the security being converted or exchanged; or the redemption of the TARP Preferred Stock as described in Use of Proceeds. When dividends are not paid in full upon the shares of Preferred Stock and any parity stock, all dividends declared upon shares of Preferred Stock and any parity stock will be declared on a proportional basis so that the amount of dividends declared per share will bear to each other the same ratio that accrued dividends for the then-current dividend period per share on the Preferred Stock, and accrued dividends, including any accumulations, on any parity stock, bear to each other. Table of Contents Dividend payment dates Dividends on the Preferred Stock will be payable when, as and if declared by our board of directors or a duly authorized committee thereof on the [ ] day of [ ], [ ], [ ] and [ ] of each year, commencing on [ ]. If any date on which dividends would otherwise be paid is not a business day, then the dividend payment date will be the next succeeding business day and no additional dividends will accrue in respect of any payment made on the next succeeding business day. No maturity The Preferred Stock will be perpetual and will have no maturity date. Redemption We may redeem shares of the Preferred Stock (i) on any dividend payment date on or after [ ], in whole or in part, from time to time or (ii) prior to [ ], in whole, but not in part, upon the occurrence of a regulatory capital treatment event, as described below under Description of the Preferred Stock Redemption Optional Redemption, in each case at a redemption price equal to $25 per share, plus any declared and unpaid dividends on the shares of Preferred Stock called for redemption. Any redemption of the Preferred Stock is subject to our receipt of any required prior approval by the Federal Reserve Board (including any successor bank regulatory authority that may become our appropriate federal banking agency) and to the satisfaction of any conditions set forth in the capital guidelines or regulations of the Federal Reserve Board or successor bank regulatory authority applicable to a redemption of the Preferred Stock. The holders of the Preferred Stock will not have the right to require a redemption. Ranking The Preferred Stock will rank, as to the payment of dividends and distribution of assets upon our liquidation, dissolution or winding-up: senior to our common stock and to any other class or series we may issue in the future ranking junior to the Preferred Stock; equal to the Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the Series A Preferred Stock ) and the Fixed Rate Cumulative Perpetual Preferred Stock, Series B (the Series B Preferred Stock , and referred to collectively in this prospectus with the Series A Preferred Stock as the TARP Preferred Stock ), and to any series of preferred stock we may issue in the future ranking equal to the Preferred Stock; and junior to any series of preferred stock we may issue in the future ranking senior to the Preferred Stock and to all of our existing and future debt obligations, including the Notes. Table of Contents Liquidation rights In the event we liquidate, dissolve or wind-up our business and affairs, either voluntarily or involuntarily, holders of the Preferred Stock will be entitled to receive liquidating distributions of $25 per share, plus any declared and unpaid dividends, before we make any distribution of assets to the holders of our common stock or any other class or series of shares ranking junior to the Preferred Stock, and subject to the rights of the holders of any class or series of securities ranking senior to or on parity with the Preferred Stock upon liquidation and the rights of our depositors and other creditors with respect to the distribution of assets. If we fail to pay in full all amounts payable with respect to the Preferred Stock and any stock having the same rank upon liquidation, dissolution or winding-up as the Preferred Stock, the holders of the Preferred Stock and such other parity stock will share in any distribution of assets in proportion to the full respective liquidating distribution to which they are entitled. After the holders of the Preferred Stock and such other parity stock are paid in full, they will have no right or claim to any of our remaining assets. Neither the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of our property or business nor a merger or consolidation by us with or into any other entity will be considered a dissolution, liquidation or winding-up of our business or affairs. Voting rights Holders of the Preferred Stock will not have voting rights, except with respect to authorizing or increasing senior stock, certain changes in terms of the Preferred Stock, the election of two directors in connection with certain dividend non-payments and as otherwise required by applicable law. Preemptive and conversion rights Holders of the Preferred Stock will not have any preemptive or conversion rights. Capital treatment The Preferred Stock is expected to qualify as tier 1 capital to the Company. Listing Application has been made to list the Preferred Stock on the NYSE MKT under the symbol VSB PR. If the application is approved, trading of the Preferred Stock on the NYSE MKT is expected to commence within a 30-day period after the original issuance date of the Preferred Stock.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001174814_sky_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001174814_sky_prospectus_summary.txt
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+prospectus summary contains basic information about us and this offering. Because it is a summary, it does not contain all of the information that you should consider before deciding whether or not you should exercise your subscription rights. To understand this offering fully, you should carefully read this prospectus, including the Risk Factors section, and our audited consolidated financial statements and the accompanying notes included herein. General Hotel Outsource Management International, Inc. is a multi-national service provider in the hospitality industry, supplying a range of services in relation to computerized minibars that are primarily intended for in-room refreshments. In addition, we manufacture, install, rent out and/or sell our own proprietary computerized minibars, the HOMI 336 and the HOMI 330 and the HOMI 226, which are the first in a new range of products currently under development and/or manufacture. The HOMI 336 and the HOMI 330 and the HOMI 226 are the first products to be designed and manufactured by the Company. Hotel Outsource Management International, Inc. is a holding company for several subsidiaries which market, and operate computerized minibars in hotels located in the United States, Europe and Israel. Hotel Outsource Management International, Inc. and its subsidiaries may collectively be referred to as "we", "us", "our" or" HOMI." HOMI was incorporated in Delaware on November 9, 2000 under the name Benjamin Acquisitions, Inc. Our core activities focus primarily on manufacturing, operating, servicing and marketing computerized minibars installed in upscale hotels throughout the world, as well as selling and renting out the computerized minibars that we manufacture. We believe that by using the appropriate equipment, including technologically advanced computerized minibars, we are able to materially improve the performance of the minibar departments, thereby improving the hotel s bottom line. For some years now, the hotel industry has been focusing on outsourcing many of the functions related to its key activities, in order to increase efficiency and lower fixed costs. In periods of economic slow-down, the interest in outsourcing solution may actually increase. We offer our customers a number of solutions that are designed to meet this need, in relation to the minibar departments, ranging from straight sale or rental of our computerized minibars, via consultation and supervision services, all the way to full outsource installation and operation arrangements. When we are consulting to the hotel, or managing the entire minibar department, we focus on hands-on, expert and dedicated management, on-site supervision, and disciplined implementation of specialized procedures which we have developed, in order to achieve our goals and improve the department s performance. Using these methods, we already manage many thousands of minibars for our customers, who are spread over four continents around the world. We have been doing business since 1997 through various subsidiaries. The current corporate structure, in which we are a holding company for various wholly owned subsidiaries around the world, has been in place since 2001. Our common stock was listed on the Over-the-Counter Bulletin Board, or "OTC Bulletin Board" from February 2004 until February 2011. It now trades on the OTCQB under the symbol "HOUM.PK." Our Growth Strategy It is our objective to continue to increase the number of minibars which we manage in hotels, using the various business models which we have developed, in accordance with each customer s needs, as well as to engage in rental, sale and installation and outsource programs using the computerized minibars that we manufacture. HOMI intends to design and manufacture peripheral products and/or accessories for the computerized minibars that we manufacture. HOMI also intends to offer new and additional minibar models. The computerized minibars and peripheral products and/or accessories manufactured by HOMI may be referred to as the New Range of Products. Table of Contents Our activities currently focus on North America, Europe and Israel. We intend to consolidate and increase our business in the regions in which we are already active. We also believe that there are growth opportunities in new markets, and that by implementing the same models that have been successful for us in our current markets, we will be able to replicate our success in these other regions also. Our services have to date been directed primarily at upscale and luxury hotels. We believe that by adjusting our existing business models, it will be possible to broaden the base of our activities so as to include midscale hotels. An integral part of this strategy involves the sale, rental, installation and outsource programs of the New Range of Products. Features of the New Range of Products which we believe will make it easier to enter the mid-scale range of hotels include: Mechanism against mistaken charges. This has been designed to increase the accuracy of the automatic billing. Substantially lower operating costs. This should improve profit margins and means that HOMI will be able to offer the New Range of Products to midscale/mid-market hotels, a very large sector previously closed to HOMI in the past, as well as to upscale hotels. No need for infrastructure at hotel. A standard electrical outlet is the only infrastructure required. Minibar data is transferred automatically via an integral, dedicated wireless system. This makes installation easier, and more attractive to hotels. By opening the midscale range of hotels to our services, we will be able to substantially increase the potential size of our target market, which should enable us to further improve our revenues and profitability. Operations To date our activities have focused primarily on managing the minibar departments in upscale hotels. We offer our customers a number of solutions ranging from consultation and supervision services, all the way to full outsource installation and operation services. We currently implement several general types of business models, further detailed below. Complete Outsource Solution. This is currently the most prominent of the business models that we employ. Many hotels do not want to pay upfront for their minibars, and many do not want to allocate resources to operate the minibars either. Accordingly, we manufacture our own New Range of Products, or purchase other manufacturers new minibars, and install them at the hotel s premises, at no immediate cost to the hotel. In the case of computerized minibars, the installation also includes software designed to interface between the minibars and the customer s existing management software, so that various actions relating to usage of the minibars such as, consumption of products from the minibars, and the locking/unlocking of the minibars, can be logged or controlled by the customer and by us. We then manage and operate the minibar department for the customer. We also supply full maintenance services for the minibars. We carry the operating expenses of the minibar department, and net revenues (after rebates and other discounts, if any) from the minibar department are shared, with us receiving the majority of the revenue and the hotel retaining the balance of the revenues. Generally, we offer incentives to the hotel so that the customer s relative share increases as the net revenue per minibar rises. In this model, the initial term of our agreement with the hotel is several years, and the customer typically has an option to extend the agreement and/or to purchase the turnkey system from us at one or more points in time during the term of the agreement. Our objective is to provide our services to the customer for the full term of the agreement, but this business model remains profitable even if the customer decides, at any stage, to exercise its option to purchase the system from us. We offer this kind of model for the New Range of Products also, for which we have made some adjustments to the business model, so that the agreements are typically for a shorter period, and the division of revenues is often based on a threshold, where HOMI is guaranteed all revenue up to the threshold, and anything above the threshold is divided between HOMI and the hotel at a fixed rate, with the majority going to HOMI. We believe that this type of model offers the customer many advantages in relation to its minibar department, including the following: No capital expenditure on the minibars Table of Contents A new revenue stream, if no minibars were previously installed and operational No labor expenses and no operating costs No purchase of goods and no inventory management Added service to guests, thereby improving the customer s competitive edge No downside: hotel is minimizing its risks, both financial and other Added flexibility, via the customer s option to purchase the system Outsourcing allows the hotel to focus on major revenue sources Quality of service: we specialize in the field Increased control and management, extensive reporting No maintenance by customer Periodic technical and technological upgrades Management & Operation of Installed Base. For customers who already have an installed, operational minibar system, we provide partial maintenance services, and full operation and management services. Essentially, the services which we provide in this case are the same as in the Outsource Solution for Leased Base model. New Business Model In 2009 we introduced a new business model, pursuant to which we receive a loan from a third party in an amount equivalent to our turnkey installed cost price of a minibar to be installed at a specific hotel(s) with which we have an outsourcing agreement. The loan repayment schedule and interest payments are made according to a calculation of the operational results of the minibars. The minibars, once installed and operational, remain in place at the hotel and we operate and maintain these minibars in accordance with our outsource operation agreement. The agreements with the third parties are to be in effect for most of the useful lives of the minibars. According to this business model, we continue to invoice each hotel for the full amount of the net revenues from its outsource operation ( Net Revenues ). From this amount, we typically deduct operational payments (cost of goods, labor, maintenance fees of $0.06 per minibar, 8% management fee) ( Operational Payments ). As long as Net Revenues exceed Operational Payments ("Operating Cash Flow"), such Operating Cash Flow shall be divided between us and the third party in accordance with the terms of the agreement. Other. The models discussed above are the primary types of arrangement that we offer our customers, but we approach each case with a certain amount of flexibility, which enables us to adjust a particular model so that it is tailor-made for the customer, but is still in line with the principles outlined above. Also, each model may be sub-divided into arrangements whereby we receive a fixed service charge, or a fixed percentage of gross revenues, instead of net revenues, and other similar adjustments. The models will also vary depending on the nature of the customer: upscale hotel, airport hotel or other hotel; and whether the minibars are computerized or manual. Sometimes, the existence of specific union rules in certain territories also require us to be flexible and adapt an arrangement so that it is workable for the customer, while still enabling us to manage and/or operate the minibar department in a way which is designed to be profitable for us, as well as for the customer. For the New Range of Products, we also offer to lease / rent or sell minibars to customers, or enter into revenue share agreements, and /or other financing arrangements, where circumstances so require. Table of Contents Competition We have over a decade of hands-on experience in providing services to the hotel industry. Whether we are consulting to a hotel, or managing the entire minibar department, we focus on hands-on, expert and dedicated management, on-site supervision, and disciplined implementation of specialized procedures which we have developed, in order to achieve our goals and improve the department s performance. Many of our competitors have experience in revenue-sharing business models, while others provide systems that are supposed to improve the efficiency of a hotel s minibar department. We believe that our ability to provide a range of services, up to a complete outsource solution, including a comprehensive financing solution as well as the full management and operation of the minibar department, places us in a favorable position, compared with some of our competitors. Our hands-on management strategy, combined with on-site supervision, allows us to assume responsibility for the following matters, thereby enabling our customers to concentrate their efforts in other areas: Implementation of our exclusive operating procedures Procurement of the consumables that are offered in the minibars Management of inventory control and monitoring of expiry dates of consumables Implementation of procedures to handle and reduce rebates Periodic reconciliation of accounts Training of minibar attendants and front office employees Maintenance and support Our objective is to enable our customers to increase the net revenues that are generated by their minibar departments, including by the following means: Taking active involvement in the selection and pricing of consumables Implementing innovative and attractive product mixes for different room categories Producing attractive, creative and novel menus Improving minibar visibility Proposing and implementing effective promotional activities Reducing rebates & manual emptying of minibars by guests In-depth and real-time data logging and reporting, thereby creating extensive sales statistics and enabling effective data-mining, designed to adapt the system to improve performance A large number of hotels still manage and operate their minibar departments in-house, and the concept of outsourcing this to a company that specializes in this kind of activity is still relatively new. In some cases, there is a general lack of awareness on the part of the hotel, either of the existence of the kind of services which we offer, or of the advantages that can be gained by making use of them. Our marketing activities are directed at increasing awareness and painting a full picture for the hotels, so that they can make an educated decision, based on the relative pros and cons. We believe that our services can be of substantial benefit to our customers, but outsourcing of this type of services still accounts for a relatively small segment of the hotel industry market. Table of Contents In addition, there are also other companies which offer some or all of the services which we offer. Presently, our main competitors are Minibar Systems, Bartech Systems International, Inc. and Dometic Holding AB which offer outsourcing or revenue sharing programs at prices that are competitive with ours. Other companies, such as Club Minibar, offer outsourcing programs utilizing manual minibars. In respect of the financing aspects of the solutions we offer to our clients, we are also in competition with certain manufacturers of the minibars themselves. With respect to the New Range of Products, we expect to be in competition with certain minibar manufacturers who offer minibars that may be perceived by our potential customers as being alternatives to our New Range of Products. Whether in the regions in which we are currently active, or in territories into which we will expand our activities in the future, the arrival of other companies offering similar services may force down our profit margins if we are to remain competitive. Customers and Markets We currently market and provide our products and services primarily to upscale and luxury hotels. As of December 31, 2012, we provide operation and/or management services to the minibar departments of 41 hotels, most of which are affiliated with prominent international hotel chains such as Hilton, Sheraton, Hyatt and others. There seems to be a direct correlation between a hotel's occupancy level and average room rate and the quantity of purchases made by guests from a hotel's minibars. As a result, in the majority of our current projects, where our revenues are based on the net revenues of the minibar departments which we operate and/or manage, our revenues are dependent on hotel occupancy levels and average room rate. Decreases in hotel occupancy levels and its average room rate could result in corresponding decreases in our revenues. Governmental Regulation In accordance with regulations related to the sale of alcoholic beverages in various countries in which we provide our services, there are instances where we operate under a hotel's license to sell alcohol. In such cases, although we do not incur costs of meeting regulatory compliance, we cannot guarantee a hotel's compliance with applicable regulations. Failure of a hotel to comply with these regulations could result in our inability to sell alcoholic beverages in the minibars being operated and/or managed by us, which would probably result in a decrease in our revenues. Intellectual Property We own the trademark HOMI in respect of products and services which we supply. In numerous countries around the world, we have registered this trademark in our name. In 2006, we filed for patent protection with regard to certain features of the New Range of Products and this patent has been registered and issued in the United States and Europe and an application is pending in Taiwan. In 2008, a further patent application was filed in the U.S., with regard to certain additional features of our New Range of Products, and this has matured into a registered patent. In 2009, a further patent application was filed in the U.S., with regard to certain additional features of our New Range of Products, and this application is pending. We hold no other registered patents, trademarks, service marks or other registered intellectual property relating to our operations. Employees As of December 31, 2012, HOMI and its subsidiaries had approximately 50 full time employees. Corporate Structure We have a fully owned United States subsidiary, HOMI USA, Inc. ( HOMI USA ), formerly known as Hotel Outsource Services, Inc., through which we conduct business in the United States. Outside the United States, we carry on our business activities through regional subsidiaries, each of which is responsible for one or more territories in which we market and/or provide our services. These subsidiaries receive management services from us, and some of them also have staff of their own, retained either as employees or under management agreements or service agreements. Table of Contents Our operating subsidiaries can, as of December 31, 2012, be summarized as follows: HOMI USA, Inc. ( HOMI USA ) HOMI Israel Ltd. ( HOMI Israel ) HOMI Industries Ltd. ( HOMI Industries ) HOMI France SAS HOMI UK Limited. HOMI Canada, Inc. HOMI Florida LLC HOMI Australia Pty. Ltd. All of our subsidiaries are currently wholly owned by us, directly or indirectly.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001180079_itron_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001180079_itron_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. Before deciding to invest in shares of our common stock, you should read this summary together with the more detailed information, including our consolidated financial statements and the related notes, provided elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in Risk Factors, our consolidated financial statements and the related notes, and Management s Discussion and Analysis of Financial Condition and Results of Operations, in each case included elsewhere in this prospectus. Silver Spring Networks, Inc. Overview We provide a leading networking platform and solutions that enable utilities to transform the power grid infrastructure into the smart grid. The smart grid intelligently connects millions of devices that generate, control, monitor and consume power, providing timely information and control to both utilities and consumers. We believe that the application of networking technology to the power grid has the potential to transform the energy industry through better communication just as the application of networking technology to the computing industry enabled the Internet. We believe the power grid is one of the most significant elements of contemporary industrial infrastructure that has yet to be extensively networked with modern technology. We were founded in 2002 to address this challenge, pioneering a fundamentally new approach to connect utilities with millions of devices on the power grid. We believe our technology will yield significant benefits to utilities, consumers and the environment, both in the near term and the future. These benefits include more efficient management of energy, improved grid reliability, capital and operational savings, the ability to pursue new initiatives, consumer empowerment, and assistance in complying with evolving regulatory mandates through reduced carbon emissions. We believe networking the power grid will fundamentally transform the world s relationship with energy. The foundation of our technology is a standards-based and secure Internet Protocol, or IP, network. Our networking platform provides two-way communications between the utility back office and devices on the power grid. In addition to our networking platform, we offer a suite of solutions that run on top of our network and complementary services, all of which we collectively refer to as our Smart Energy Platform. Our solutions include advanced metering, which allows utilities to automate a number of manual processes and improve operational efficiencies, offer flexible pricing programs to consumers, and improve customer service with faster outage detection and restoration; distribution automation, which provides utilities with real-time visibility into the health of the grid, enabling better management and control of power distribution assets to improve grid reliability; and demand-side management, which enables utilities to offer consumers a variety of programs and incentives to use energy more efficiently and reduce usage at times of peak demand. Our service offerings include professional services to implement our products, managed services and software as a service, or SaaS, to assist utilities with managing the network and solutions, and ongoing customer support. Our Smart Energy Platform comprises hardware, software and services and combines with devices manufactured by third-party partners to form end-to-end smart grid offerings. We have architected our networking platform to support multiple current and future smart grid solutions. As a result, we believe utilities can increase the value of their network investment as they deploy additional solutions on this network. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Issued March 5, 2013 3,705,000 Shares COMMON STOCK This is an initial public offering of shares of common stock of Silver Spring Networks, Inc. Silver Spring Networks is offering all of the shares to be sold in the offering. Concurrently with the closing of this offering, entities affiliated with Foundation Capital will purchase from us in a private placement shares of common stock with an aggregate purchase price of approximately $12 million, at a price per share equal to the initial public offering price. Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $16.00 and $18.00. Our common stock has been approved for listing on the New York Stock Exchange under the symbol SSNI. We are an emerging growth company as defined under federal securities laws. See
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+Prospectus summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001284807_ply-gem_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001284807_ply-gem_prospectus_summary.txt
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+Prospectus summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001346922_homeowners_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001346922_homeowners_prospectus_summary.txt
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+Common Stock This prospectus relates to the resale by selling stockholders named herein of up to an aggregate of 15,739,182 shares of common stock, par value $0.0001 per share, of Homeowners of America Holding Corporation. The shares of common stock being registered constitute 100% of our outstanding securities after conversion of our Series A and Series B Preffered Stock and the conversion of convertible promissory notes. There is no public market for our common stock. We intend to seek a qualification for our common stock to be quoted on the Over-the-Counter Bulletin Board; however, no assurance can be given as to our success in qualifying for quotation on the OTCBB. The selling stockholders may sell their shares of our common stock at a fixed price of $0.50 per share (the exercise price of our proposed stock options to be issued upon the effective date of this Registration Statement) until our common stock is quoted on the OTCBB, and thereafter in a variety of transactions as described under the heading "Plan of Distribution" beginning on page 66, including transactions on any stock exchange, market or facility on which our common stock may be traded, in privately negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to such market prices or at negotiated prices. We have no basis for estimating either the number of shares of our common stock that will ultimately be sold by the selling stockholders or the prices at which such shares will be sold. All of the shares of common stock are being sold by the selling stockholders named in this prospectus. We will not receive any of the proceeds from the sale of the shares of common stock being sold by the selling stockholders. We are bearing all of the expenses in connection with the registration of the shares of common stock, but all selling and other expenses incurred by the selling stockholders, including commissions and discounts, if any, attributable to the sale or disposition of the shares will be borne by them. We are an , ' ': , ' ': emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements for future filings. You should read this prospectus, the applicable prospectus supplement, if any, and other offering materials carefully before you invest. An investment in our common stock involves substantial risks. See "Risk Factors" beginning on page 6 of this prospectus. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2013 TABLE OF CONTENTS Prospectus Page CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 1 SUMMARY 2
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001355128_zco_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001355128_zco_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information more fully described elsewhere or incorporated by reference in this prospectus. You should read the following summary together with the entire prospectus, including the more detailed information regarding us and the common stock being sold in this offering, and the information that we have incorporated by reference in this prospectus, including our financial statements and the related notes. You should carefully consider, among other things, the matters discussed in the section entitled Risk Factors before deciding to invest in our common stock. Unless otherwise stated or the context requires otherwise, references in this prospectus to we, our or us refer to OCZ Technology Group, Inc. and our subsidiaries. Overview OCZ Technology Group, Inc., a Delaware corporation ( OCZ ) was formed in 2002. OCZ is a leader in the design, manufacturing, and distribution of high performance and reliable Solid-State Drives ( SSDs ) and premium computer components. We have built on our expertise in high-speed memory to become a leader in the enterprise and client SSD markets, a technology that competes with traditional rotating magnetic hard disk drives ( HDDs ). SSDs are faster, more reliable, generate less heat and use less power than traditional rotational based HDDs used in personal computers and servers today. OCZ designs and manufactures SSDs in a variety of form factors and interfaces including SATA, SAS, PCIe, as well as offers flash caching and virtualization software to provide a total solution for enterprise clients. In addition to SSD technology, we also offer high performance power management products. Our corporate headquarters is located in San Jose, California. We have subsidiaries and/or offices located in Canada, Israel, Netherlands, Germany, Taiwan and the United Kingdom. Our fiscal year ends on the last day of February. Historically, we had focused on developing, manufacturing, and selling high-performance DRAM memory modules and flash drives to computing enthusiasts through catalog and online retail channels. As the market for SSDs began to develop over the last several years, we shifted our focus to serve this emerging market as our primary focus. We believe that our strong R&D foundation in memory and portable flash devices provides a solid R&D platform and natural transition to develop our SSD capabilities, given the technological similarities between product categories. In 2009, we began to implement a strategy to shift our focus towards the emerging SSD market, which has resulted in our revenue mix shifting heavily towards SSDs, which became a majority of our business beginning in 2010. In August 2010, we announced that we planned to deemphasize our legacy memory products by discontinuing certain low margin commodity DRAM module products. By February 28, 2011, the end of our fiscal year 2011, we had discontinued our legacy memory products to focus on SSDs in accordance with our previously announced plans in January 2011. In October 2012, we announced that we planned to streamline our product offerings, including the reduction of our value SSDs for the client market, in order to address the mainstream and high performance client markets, as well as enterprise and OEM solutions. By February 28, 2013, the end of our fiscal year 2013, we had substantially discontinued most of our value SSDs as well as reduced the number of our other product offerings. Throughout this period, we have continued to invest in research and development surrounding a wide array of SSD types and interfaces and developing our own in-house silicon and firmware. Today the vast majority of our high performance client drives, including those in top selling Vertex and Vector families utilize our own in-house designed proprietary Barefoot 3 controller. In addition to our SSD product line, we design, develop, and distribute components including AC/DC switching power supplies that are designed for high performance computing systems, workstations and servers. We offer our customers flexibility and customization by providing a broad variety of solutions which are interoperable and are designed to enable computers to run faster and more reliably, efficiently, and cost effectively. Through our diversified and global distribution channel, we offer a wide variety of products to our customers, including leading online and offline retailers and OEMs. We develop flexible and customizable solutions quickly and efficiently to meet the ever changing market needs and we provide superior customer service. We believe our high performance product offerings offer the speed, density, size, and reliability necessary to meet the special demands of: mission critical servers and high end workstations; industrial equipment and computer systems; computer and computer gaming enthusiasts; personal computer ( PC ) upgrades to extend the useable life of existing PCs; high performance computing and scientific computing; video and music editing and content creation; mobile computing; home theater PCs and digital home convergence products; and digital photography and digital image manipulation computers. As of our fiscal year ended February 28, 2013, we had over 400 customers, most of which are distributors or retailers in 60 countries. We perform the majority of our research and development efforts in-house, which increases communication and collaboration between design teams, streamlines the development process, and reduces time-to-market. Our in-house hardware R&D capabilities include ASIC design and verification, system level design including board design and layout, industrial design and thermal optimization. We also have in-house software R&D which includes NAND flash firmware development, kernel mode device drivers, tools that encompass both manufacturing and end-user manageability, and virtualization and caching software that is offered both standalone and bundled with our SSD hardware for total system solutions. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission ( SEC ) is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, dated October 22, 2013 PROSPECTUS 7,705,000 Shares of Common Stock issuable upon the conversion of outstanding Convertible Debentures 5,778,750 Shares of Common Stock issuable upon the exercise of outstanding Warrants This prospectus relates to the resale by selling stockholders identified in the section entitled Selling Stockholders beginning on page 19 of this prospectus of up to an aggregate of 13,483,750 shares of common stock, par value $0.0025 per share, of OCZ Technology Group, Inc. ( OCZ ), which consist of: 7,705,000 shares of Common Stock issuable upon the conversion of outstanding Convertible Debentures, and 5,778,750 shares of Common Stock issuable upon the exercise of outstanding Warrants The Selling Stockholders (which term as used herein includes their pledgees, assignees or other successors-in-interest) may offer and sell any of the shares of common stock from time to time at fixed prices, at market prices or at negotiated prices, and may engage a broker, dealer or underwriter to sell the shares. For additional information on the possible methods of sale that may be used by the Selling Stockholders, you should refer to the section entitled Plan of Distribution beginning on page 21 of this prospectus. We will not receive any proceeds from the sale of the shares of common stock by the Selling Stockholders. No underwriter or other person has been engaged by OCZ to facilitate the sale of shares of our common stock in this offering. The Selling Stockholders may be deemed underwriters of the shares of our common stock that they are offering. We will bear all costs, expenses and fees in connection with the registration of these shares. The Selling Stockholders will bear all commissions and discounts, if any, attributable to their respective sales of shares. Our common stock is currently listed on The NASDAQ Capital Market under the symbol OCZ . On October 21, 2013, the last reported sales price of our shares on The NASDAQ Capital Market was $1.29 per share. You should rely only on the information contained in this prospectus. You should consider carefully the risks that we have described in the section entitled Risk Factors beginning on page 3 of this prospectus before deciding whether to invest in our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful and complete. Any representation to the contrary is a criminal offense. This prospectus is dated , 2013. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The Selling Stockholders are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. Table of Contents Acquisition of Sanrad Inc. On January 9, 2012, we acquired Sanrad Inc. ( Sanrad ), a privately-held provider of flash caching and virtualization software and hardware. Total consideration exchanged was comprised of 2.1 million shares of our common stock valued at $16.9 million determined based on the market value of our common stock on the date of closing. Sanrad s technology enables customers to fully leverage their flash based storage investments, extending the lifespan of the storage infrastructure and maximizing efficiency of their data centers. The acquisition of Sanrad includes its research and development facilities located in Tel Aviv, Israel and is expected to help accelerate the customer adoption of OCZ s offerings in the PCIe based flash storage systems. Assets acquisition from PLX Technology. On October 24, 2011, we completed an acquisition of certain assets from PLX Technology, Inc. ( PLX ). This transaction provided further access to advanced technology in our effort to maintain and expand our market position as a leader in the design, manufacture and distribution of high performance SSDs. Pursuant to the agreement, we obtained a non-exclusive perpetual license related to consumer storage technology, capital equipment and a Design Team, which consisted primarily of approximately 40 engineers located in Abingdon, United Kingdom in exchange for cash consideration of $2.2 million. Acquisition of Indilinx Co., Ltd. On March 25, 2011, we completed the acquisition of 100% of the equity interests of Indilinx Co., Ltd., ( Indilinx ) a privately-held company organized under the laws of the Republic of Korea. Indilinx s products and solutions are comprised of advanced SSD controllers, SSD reference designs, and software, which enable the rapid development and deployment of high performance solid state drives. This technology is applicable to a wide range of storage solutions from cost-sensitive consumer devices to performance-optimized systems demanded by mission-critical enterprise applications. The total acquisition consideration of $32.8 million consisted of (i) 4.2 million shares of OCZ common stock with a total fair value of $32.2 million, based on the price of OCZ common stock at the time of close, and (ii) $0.6 million of cash paid to the holders of Indilinx vested and unvested stock options as of the close of the transaction. Audit Opinion Going Concern Emphasis. As discussed in Note 1 to the consolidated financial statements of the Annual Report on Form 10-K for the year ended February 28, 2013, we have incurred recurring operating losses and negative cash flows from operating activities since inception through February 28, 2013. In addition, we have an accumulated deficit of $310.7 million as of February 28, 2013. Through February 28, 2013, we have not generated sufficient cash from operations and have relied primarily on the proceeds from equity offerings and debt financing such as increased trade terms from vendors and credit facilities to finance our operations. Moreover, we need to secure one or more additional financings to fund our near-term operations. These matters raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Strategic Alternatives. On August 13, 2013, we announced that we had retained Deutsche Bank Securities Inc. to assist the Board of Directors in evaluating various strategic alternatives available to the Company. For our fiscal years ended February 28, 2013, February 29, 2012, and February 28, 2011, our ten largest customers accounted for 49%, 40% and 50% of net sales, respectively. For fiscal 2013 and fiscal 2012, no customers accounted for more than 10% of our net revenue, and in fiscal 2011, one customer accounted for 17% of our net revenue. Corporate Information We were founded in 2002 and incorporated in Delaware in December 2004. We have five subsidiaries, Indilinx, Inc., a California corporation, OCZ Israel, Ltd, an Israeli Corporation, OCZ Technology, Limited, an United Kingdom Corporation, OCZ Canada, Inc., a Canadian corporation, and Sanrad, Inc. a Delaware Corporation. Our principal executive offices are located at 6373 San Ignacio Avenue, San Jose California, 95119, and our telephone number is (408) 733-8400. Our website address is www.ocz.com. The information on, or that can be accessed through, our website is not part of this prospectus. The Offering Shares outstanding prior to offering: As of October 9, 2013, we had 68,207,166 shares of our common stock issued and outstanding. Common Stock offered for resale to the public by the Selling Stockholders: Up to 13,483,750 shares of our common stock, which consists of: Up to 7,705,000 shares of common stock issuable upon the conversion of outstanding convertible debentures, and Up to 5,778,750 shares of common stock issuable upon the exercise of outstanding warrants. Use of Proceeds: Proceeds from the sale of common stock covered by this prospectus will be received by the Selling Stockholders. We will not receive any proceeds from the sale of the shares of common stock covered by this prospectus. We may receive proceeds from the exercise of the warrants whose underlying shares of common stock are covered by this prospectus. The NASDAQ Capital Market symbol for our common stock: OCZ
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you in making your investment decision. You should read the entire prospectus, including the financial data and related notes and section entitled Risk Factors, before making an investment decision. Unless the context otherwise indicates, as used in this prospectus, the terms SunGard, we, our, us, and the company and similar terms refer to SunGard Data Systems Inc. and its subsidiaries on a consolidated basis. Some of the statements in this prospectus constitute forward-looking statements. See Forward-Looking Statements. Our Company We are one of the world s leading software and technology services companies. We provide software and technology services to financial services, education and public sector organizations. We also provide disaster recovery services, managed services, information availability consulting services and business continuity management software. We serve approximately 25,000 customers in more than 70 countries. Our high quality software solutions, excellent customer support and specialized technology services result in strong customer retention rates across all of our business segments and create long-term customer relationships. We operate our business in three segments: Financial Systems ( FS ), Availability Services ( AS ) and Public Sector & Education ( PS&E ), which is comprised of our Public Sector business ( PS ) and our K-12 Education business ( K-12 ). On January 19 and 20, 2012, the Company completed the sale of its Higher Education ( HE ) business, which is included in discontinued operations for purposes of this prospectus. FS provides mission-critical software and technology services to virtually every type of financial services institution, including buy-side and sell-side institutions, third-party administrators, wealth managers, retail banks, insurance companies, corporate treasuries and energy trading firms. Our broad range of complementary software solutions and associated technology services help financial services institutions automate the business processes associated with trading, managing portfolios and accounting for investment assets. AS provides disaster recovery services, managed services, information availability consulting services and business continuity management software to more than 8,000 customers in North America and Europe. With five million square feet of data center and operations space, AS assists IT organizations across virtually all industry and government sectors to prepare for and recover from emergencies by helping them minimize their computer downtime and optimize their uptime. Through direct sales and channel partners, AS helps organizations ensure their people and customers have uninterrupted access to the information systems they need in order to do business. PS&E (PS and K-12) provides software and technology services designed to meet the specialized needs of local, state and federal governments, public safety and justice agencies, public and private schools, utilities, nonprofits and other public sector institutions. We were acquired in August 2005 in a leveraged buy-out ( LBO ) by a consortium of private equity investment funds associated with Bain Capital Partners, The Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co., Providence Equity Partners, Silver Lake and TPG (collectively, the Sponsors ). As a result of the LBO, we are highly leveraged and our equity is not publicly traded. Our Sponsors continually evaluate various strategic alternatives with respect to the Company. There can be no assurance that we will ultimately pursue any strategic alternatives with respect to any business segment, or, if we do, what the structure or timing for any such transaction would be. Table of Contents Table of Additional Registrant Guarantors Exact Name of Registrant Guarantor as Specified in its Charter State or Other Jurisdiction of Incorporation or Organization I.R.S. Employer Identification Number Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant Guarantor s Principal Executive Offices Advanced Portfolio Technologies, Inc. Delaware 22-3245876 340 Madison Avenue 8th Floor New York, NY 10173 Automated Securities Clearance LLC Delaware 22-3701255 545 Washington Blvd. 7th Floor Jersey City, NJ 07310 GL Trade Overseas, Inc. Delaware 06-1414402 340 Madison Avenue New York, NY 10173 Inflow LLC Delaware 84-1439489 680 E. Swedesford Rd. Wayne, PA 19087 Online Securities Processing Inc. Delaware 77-0589377 680 E. Swedesford Rd. Wayne, PA 19087 SIS Europe Holdings LLC Delaware 41-1511643 680 E. Swedesford Rd. Wayne, PA 19087 SRS Development Inc. Delaware 23-2746281 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Ambit LLC Delaware 04-2766162 100 High Street 19th Floor Suffolk, MA 02110 SunGard Asia Pacific Inc. Delaware 51-0370861 601 Walnut St. Suite 1010 Philadelphia, PA 19106 SunGard Availability Services LP Pennsylvania 23-2106195 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Availability Services Ltd. Delaware 23-3024711 680 E. Swedesford Rd. Wayne, PA 19087 SunGard AvantGard LLC California 95-3440473 23975 Park Sorrento 4th Floor Calabasas, CA 91302 SunGard Business Systems LLC Delaware 23-2139612 377 E. Butterfield Road Suite 800 Lombard, IL 60148 SunGard Computer Services LLC Delaware 68-0499469 600 Laurel Road Voorhees, NJ 08043 SunGard Consulting Services LLC Delaware 87-0727844 10375 Richmond Suite 700 Houston, TX 77042 SunGard CSA LLC Delaware 20-4280640 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Development Corporation Delaware 23-2589002 680 E. Swedesford Rd. Wayne, PA 19087 Table of Contents Corporate Information SunGard Data Systems Inc. was incorporated under Delaware law in 1982. Our principal executive offices are located at 680 East Swedesford Road, Wayne, Pennsylvania 19087. Our telephone number is (484) 582-2000. Our corporate website is located at www.sungard.com. The information on, or accessible through, our corporate website is not a part of, or incorporated by reference in, this prospectus. Incorporation By Reference The SEC allows us to incorporate by reference the information we file with them into this prospectus. See Incorporation by Reference. Table of Contents Exact Name of Registrant Guarantor as Specified in its Charter State or Other Jurisdiction of Incorporation or Organization I.R.S. Employer Identification Number Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant Guarantor s Principal Executive Offices SunGard DIS Inc. Delaware 23-2829670 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Energy Systems Inc. Delaware 13-4081739 601 Walnut St. Suite 1010 Philadelphia, PA 19106 SunGard eProcess Intelligence LLC Delaware 13-3217303 600 Lanidex Plaza Parsippany, NJ 07054 SunGard Financial Systems LLC Delaware 23-2585361 3 Van de Graff Drive Burlington, MA 01803-5148 SunGard Investment Systems LLC Delaware 23-2115509 377 E. Butterfield Road Suite 800 Lombard, IL 60148 SunGard Investment Ventures LLC Delaware 51-0297001 680 E. Swedesford Road Wayne, PA 19087 SunGard iWORKS LLC Delaware 23-2814630 11560 Great Oaks Way Suite 200 Alpharetta, GA 30022 SunGard iWORKS P&C (US) Inc. Delaware 13-3248040 200 Business Park Dr. Armonk, NY 10504 SunGard Kiodex LLC Delaware 13-4100480 59 Maiden Lane, 32nd Floor New York, NY 10038-4624 SunGard NetWork Solutions Inc. Delaware 23-2981034 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Public Sector Inc. Florida 59-2133858 1000 Business Center Drive Lake Mary, FL 32746 SunGard Reference Data Solutions LLC Delaware 72-1571745 340 Madison Avenue 8th Floor New York, NY 10173 SunGard SAS Holdings Inc. Delaware 26-0052190 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Securities Finance LLC Delaware 13-3799258 14 Manor Parkway Salem, NH 03079 SunGard Securities Finance International LLC Delaware 13-3809371 14 Manor Parkway Salem, NH 03079 SunGard Shareholder Systems LLC Delaware 23-2025519 2300 Main Street Suite 400 Kansas City, MO 64108 SunGard Software, Inc. Delaware 51-0287708 680 E. Swedesford Road Wayne, PA 19087 SunGard Systems International Inc. Pennsylvania 23-2490902 340 Madison Avenue 8th Floor New York, NY 10173 Table of Contents The Notes The summary below describes the principal terms of the notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The sections captioned Description of Senior Notes Due 2018, Description of Senior Notes Due 2020 and Description of Senior Subordinated Notes in this prospectus contain a more detailed description of the terms and conditions of the notes. Issuer SunGard Data Systems Inc. Securities Offered 7 3/8% Senior Notes due 2018. 7 5/8% Senior Notes due 2020. 6.625% Senior Subordinated Notes due 2019. Maturity The senior notes due 2018 mature on November 15, 2018. The senior notes due 2020 mature on November 15, 2020. The senior subordinated notes mature on November 1, 2019. Interest Rate The senior notes due 2018 bear interest at a rate of 7 3/8% per annum. The senior notes due 2020 bear interest at a rate of 7 5/8% per annum. The senior subordinated notes bear interest at a rate of 6.625% per annum. Interest Payment Dates We pay interest on the senior notes due 2018 and the senior notes due 2020 on May 15 and November 15 and on the senior subordinated notes on May 1 and November 1. Interest accrues from the most recent date to which interest has been paid or, if no interest has been paid, the issue date of the notes. Guarantees Each of our 100% owned domestic subsidiaries that guarantees the obligations under our senior secured credit facilities are initially jointly and severally, fully and unconditionally guaranteeing the senior notes on a senior unsecured basis and the senior subordinated notes on an unsecured senior subordinated basis. Ranking The senior notes are our senior unsecured obligations and: rank senior in right of payment to our future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior notes, including the senior subordinated notes; rank equally in right of payment to all of our existing and future senior debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the senior notes; and are effectively subordinated in right of payment to all of our existing and future secured debt including obligations under our senior secured credit facilities and the 4.875% senior notes due 2014 (referred to in this prospectus as the senior secured notes ), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of each of our subsidiaries that is not a guarantor of the senior notes. Table of Contents Similarly, the guarantees of the senior notes are senior unsecured obligations of the guarantors and: rank senior in right of payment to all of the applicable guarantor s future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior notes, including such guarantor s guarantee under the senior subordinated notes; rank equally in right of payment to all of the applicable guarantor s existing and future senior debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the senior notes; and are effectively subordinated in right of payment to all of the applicable guarantor s existing and future secured debt (including such guarantor s guarantee under our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of any subsidiary of a guarantor if that subsidiary is not also a guarantor of the senior notes. The senior subordinated notes are our unsecured senior subordinated obligations and: rank senior in right of payment to our existing and future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior subordinated notes; rank equally in right of payment to any or all of our future senior subordinated debt; are subordinated in right of payment to all of our existing and future senior debt (including our senior secured credit facilities, the senior secured notes and the senior notes); and are effectively subordinated in right of payment to all of our existing and future secured debt (including our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of each of our subsidiaries that is not a guarantor of the senior subordinated notes. Similarly, the guarantees of the senior subordinated notes are unsecured senior subordinated obligations of the guarantors and: rank senior in right of payment to all of the applicable guarantor s existing and future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior subordinated notes; rank equally in right of payment to all of the applicable guarantor s existing and future senior subordinated debt; Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 31, 2013 PRELIMINARY PROSPECTUS SunGard Data Systems Inc. 7 3/8% Senior Notes due 2018 7 5/8% Senior Notes due 2020 6.625% Senior Subordinated Notes due 2019 The 7 3/8% Senior Notes due 2018 (the senior notes due 2018 ) were issued in exchange for the 7 3/8% Senior Notes due 2018 originally issued on November 16, 2010. The 7 5/8% Senior Notes due 2020 (the senior notes due 2020) were issued in exchange for the 7 5/8% Senior Notes due 2020 originally issued on November 16, 2010. The 6.625% Senior Subordinated Notes due 2019 (the senior subordinated notes ) were issued in exchange for the 6.625% Senior Subordinated Notes due 2019 originally issued on November 1, 2012. The senior notes due 2018, the senior notes due 2020 (collectively, the senior notes ) and the senior subordinated notes are collectively referred to herein as the notes, unless the context otherwise requires. The senior notes due 2018 bear interest at a rate of 7 3/8% per annum and mature on November 15, 2018. The senior notes due 2020 bear interest at a rate of 7 5/8% per annum and mature on November 15, 2020. Interest on the senior notes due 2018 and the senior notes due 2020 is payable on May 15 and November 15 of each year, beginning November 15, 2011. The senior subordinated notes bear interest at a rate of 6.625% per annum and mature on November 1, 2019. Interest on the senior subordinated notes due 2019 is payable on May 1 and November 1 of each year, beginning on November 1, 2013. We may redeem some or all of the notes at any time at the redemption prices set forth in this prospectus. The senior notes are our senior unsecured obligations and rank equal in right of payment to all of our existing and future senior indebtedness. The senior subordinated notes are our unsecured senior subordinated obligations and are subordinated in right of payment to all of our existing and future senior indebtedness, including the senior secured credit facilities, the existing senior notes and the senior notes offered hereby. Each of our 100% owned domestic subsidiaries that guarantees our senior secured credit facilities are initially unconditionally guaranteeing the senior notes with guarantees that rank equal in right of payment to all of the senior indebtedness of such subsidiary, and are initially unconditionally guaranteeing the senior subordinated notes with guarantees that are subordinated in right of payment to all existing and future senior indebtedness of such subsidiary. The notes and the guarantees are effectively subordinated to our existing and future secured indebtedness and that of the guarantors to the extent of the assets securing such indebtedness. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. See Risk Factors beginning on page 11 for a discussion of certain risks that you should consider before investing in the notes. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the notes or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and other affiliates of The Goldman Sachs Group, Inc. in connection with offers and sales of the notes related to market-making transactions in the notes effected from time to time. Such affiliates of The Goldman Sachs Group, Inc. may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2013. Table of Contents are subordinated in right of payment to all of the applicable guarantor s existing and future senior debt (including such guarantor s guarantee under our senior secured credit facilities, the senior secured notes and the senior notes) and other obligations that are not, by their terms, expressly subordinated in right of payment to the senior subordinated notes; and are effectively subordinated in right of payment to all of the applicable guarantor s existing and future secured debt (including such guarantor s guarantee under our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of any subsidiary of a guarantor if that subsidiary is not also a guarantor of the senior subordinated notes. As of March 31, 2013, (1) the notes and related guarantees ranked effectively junior to approximately $3,949 million of senior secured indebtedness (which includes $250 million face amount of our senior secured notes that are recorded at $247 million and $200 million under our receivables facility which is secured by accounts receivable of our subsidiaries that participate in the facility), (2) the senior notes and related guarantees ranked senior to the $1,000 million of senior subordinated notes, (3) the senior subordinated notes and related guarantees ranked junior to the senior indebtedness under the senior secured credit facilities, the senior secured notes, the senior notes, the receivables facility and $13 million of payment obligations relating to foreign bank debt and capital lease obligations, all of which totaled approximately $5,562 million, (4) we had an additional $828 million of unutilized capacity under our revolving credit facility, after giving effect to certain outstanding letters of credit and (5) our non-guarantor subsidiaries had approximately $211 million (of the $5,562 million described above), which relates to the receivables facility and payment obligations relating to foreign bank debt and capital lease obligations. Optional Redemption Prior to November 15, 2013, we have the option to redeem the senior notes due 2018, in whole or in part, at a price equal to 100% of their principal amount plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium, as described under Description of Senior Notes due 2018 Optional Redemption. Beginning on November 15, 2013, we may redeem some or all of the senior notes due 2018 at the redemption prices listed under Description of Senior Notes Due 2018 Optional Redemption plus accrued and unpaid interest on the senior notes due 2018, if any, to the date of redemption. Prior to November 15, 2015, we have the option to redeem the senior notes due 2020, in whole or in part, at a price equal to 100% of their principal amount plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium, as described under Description of Senior Notes due 2020 Optional Redemption. Table of Contents You should rely only on the information contained in this prospectus or incorporated by reference into this prospectus. We have not authorized anyone to provide you with different information from that contained in, or incorporated by reference into, this prospectus. The prospectus may be used only for the purposes for which it has been published and no person has been authorized to give any information not contained or incorporated by reference herein. If you receive any other information, you should not rely on it. We are not making an offer of these securities in any state where the offer is not permitted. You should assume that the information in this prospectus or incorporated by reference into this prospectus is accurate only as of the date on the front cover, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, prospects, financial condition and results of operations may have changed since that date. TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you in making your investment decision. You should read the entire prospectus, including the financial data and related notes and section entitled Risk Factors, before making an investment decision. Unless the context otherwise indicates, as used in this prospectus, the terms SunGard, we, our, us, and the company and similar terms refer to SunGard Data Systems Inc. and its subsidiaries on a consolidated basis. Some of the statements in this prospectus constitute forward-looking statements. See Forward-Looking Statements. Our Company We are one of the world s leading software and technology services companies. We provide software and technology services to financial services, education and public sector organizations. We also provide disaster recovery services, managed services, information availability consulting services and business continuity management software. We serve approximately 25,000 customers in more than 70 countries. Our high quality software solutions, excellent customer support and specialized technology services result in strong customer retention rates across all of our business segments and create long-term customer relationships. We operate our business in three segments: Financial Systems ( FS ), Availability Services ( AS ) and Public Sector & Education ( PS&E ), which is comprised of our Public Sector business ( PS ) and our K-12 Education business ( K-12 ). On January 19 and 20, 2012, the Company completed the sale of its Higher Education ( HE ) business, which is included in discontinued operations for purposes of this prospectus. FS provides mission-critical software and technology services to virtually every type of financial services institution, including buy-side and sell-side institutions, third-party administrators, wealth managers, retail banks, insurance companies, corporate treasuries and energy trading firms. Our broad range of complementary software solutions and associated technology services help financial services institutions automate the business processes associated with trading, managing portfolios and accounting for investment assets. AS provides disaster recovery services, managed services, information availability consulting services and business continuity management software to more than 8,000 customers in North America and Europe. With five million square feet of data center and operations space, AS assists IT organizations across virtually all industry and government sectors to prepare for and recover from emergencies by helping them minimize their computer downtime and optimize their uptime. Through direct sales and channel partners, AS helps organizations ensure their people and customers have uninterrupted access to the information systems they need in order to do business. PS&E (PS and K-12) provides software and technology services designed to meet the specialized needs of local, state and federal governments, public safety and justice agencies, public and private schools, utilities, nonprofits and other public sector institutions. We were acquired in August 2005 in a leveraged buy-out ( LBO ) by a consortium of private equity investment funds associated with Bain Capital Partners, The Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co., Providence Equity Partners, Silver Lake and TPG (collectively, the Sponsors ). As a result of the LBO, we are highly leveraged and our equity is not publicly traded. Our Sponsors continually evaluate various strategic alternatives with respect to the Company. There can be no assurance that we will ultimately pursue any strategic alternatives with respect to any business segment, or, if we do, what the structure or timing for any such transaction would be. Table of Contents Table of Additional Registrant Guarantors Exact Name of Registrant Guarantor as Specified in its Charter State or Other Jurisdiction of Incorporation or Organization I.R.S. Employer Identification Number Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant Guarantor s Principal Executive Offices Advanced Portfolio Technologies, Inc. Delaware 22-3245876 340 Madison Avenue 8th Floor New York, NY 10173 Automated Securities Clearance LLC Delaware 22-3701255 545 Washington Blvd. 7th Floor Jersey City, NJ 07310 GL Trade Overseas, Inc. Delaware 06-1414402 340 Madison Avenue New York, NY 10173 Inflow LLC Delaware 84-1439489 680 E. Swedesford Rd. Wayne, PA 19087 Online Securities Processing Inc. Delaware 77-0589377 680 E. Swedesford Rd. Wayne, PA 19087 SIS Europe Holdings LLC Delaware 41-1511643 680 E. Swedesford Rd. Wayne, PA 19087 SRS Development Inc. Delaware 23-2746281 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Ambit LLC Delaware 04-2766162 100 High Street 19th Floor Suffolk, MA 02110 SunGard Asia Pacific Inc. Delaware 51-0370861 601 Walnut St. Suite 1010 Philadelphia, PA 19106 SunGard Availability Services LP Pennsylvania 23-2106195 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Availability Services Ltd. Delaware 23-3024711 680 E. Swedesford Rd. Wayne, PA 19087 SunGard AvantGard LLC California 95-3440473 23975 Park Sorrento 4th Floor Calabasas, CA 91302 SunGard Business Systems LLC Delaware 23-2139612 377 E. Butterfield Road Suite 800 Lombard, IL 60148 SunGard Computer Services LLC Delaware 68-0499469 600 Laurel Road Voorhees, NJ 08043 SunGard Consulting Services LLC Delaware 87-0727844 10375 Richmond Suite 700 Houston, TX 77042 SunGard CSA LLC Delaware 20-4280640 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Development Corporation Delaware 23-2589002 680 E. Swedesford Rd. Wayne, PA 19087 Table of Contents Corporate Information SunGard Data Systems Inc. was incorporated under Delaware law in 1982. Our principal executive offices are located at 680 East Swedesford Road, Wayne, Pennsylvania 19087. Our telephone number is (484) 582-2000. Our corporate website is located at www.sungard.com. The information on, or accessible through, our corporate website is not a part of, or incorporated by reference in, this prospectus. Incorporation By Reference The SEC allows us to incorporate by reference the information we file with them into this prospectus. See Incorporation by Reference. Table of Contents Exact Name of Registrant Guarantor as Specified in its Charter State or Other Jurisdiction of Incorporation or Organization I.R.S. Employer Identification Number Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant Guarantor s Principal Executive Offices SunGard DIS Inc. Delaware 23-2829670 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Energy Systems Inc. Delaware 13-4081739 601 Walnut St. Suite 1010 Philadelphia, PA 19106 SunGard eProcess Intelligence LLC Delaware 13-3217303 600 Lanidex Plaza Parsippany, NJ 07054 SunGard Financial Systems LLC Delaware 23-2585361 3 Van de Graff Drive Burlington, MA 01803-5148 SunGard Investment Systems LLC Delaware 23-2115509 377 E. Butterfield Road Suite 800 Lombard, IL 60148 SunGard Investment Ventures LLC Delaware 51-0297001 680 E. Swedesford Road Wayne, PA 19087 SunGard iWORKS LLC Delaware 23-2814630 11560 Great Oaks Way Suite 200 Alpharetta, GA 30022 SunGard iWORKS P&C (US) Inc. Delaware 13-3248040 200 Business Park Dr. Armonk, NY 10504 SunGard Kiodex LLC Delaware 13-4100480 59 Maiden Lane, 32nd Floor New York, NY 10038-4624 SunGard NetWork Solutions Inc. Delaware 23-2981034 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Public Sector Inc. Florida 59-2133858 1000 Business Center Drive Lake Mary, FL 32746 SunGard Reference Data Solutions LLC Delaware 72-1571745 340 Madison Avenue 8th Floor New York, NY 10173 SunGard SAS Holdings Inc. Delaware 26-0052190 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Securities Finance LLC Delaware 13-3799258 14 Manor Parkway Salem, NH 03079 SunGard Securities Finance International LLC Delaware 13-3809371 14 Manor Parkway Salem, NH 03079 SunGard Shareholder Systems LLC Delaware 23-2025519 2300 Main Street Suite 400 Kansas City, MO 64108 SunGard Software, Inc. Delaware 51-0287708 680 E. Swedesford Road Wayne, PA 19087 SunGard Systems International Inc. Pennsylvania 23-2490902 340 Madison Avenue 8th Floor New York, NY 10173 Table of Contents The Notes The summary below describes the principal terms of the notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The sections captioned Description of Senior Notes Due 2018, Description of Senior Notes Due 2020 and Description of Senior Subordinated Notes in this prospectus contain a more detailed description of the terms and conditions of the notes. Issuer SunGard Data Systems Inc. Securities Offered 7 3/8% Senior Notes due 2018. 7 5/8% Senior Notes due 2020. 6.625% Senior Subordinated Notes due 2019. Maturity The senior notes due 2018 mature on November 15, 2018. The senior notes due 2020 mature on November 15, 2020. The senior subordinated notes mature on November 1, 2019. Interest Rate The senior notes due 2018 bear interest at a rate of 7 3/8% per annum. The senior notes due 2020 bear interest at a rate of 7 5/8% per annum. The senior subordinated notes bear interest at a rate of 6.625% per annum. Interest Payment Dates We pay interest on the senior notes due 2018 and the senior notes due 2020 on May 15 and November 15 and on the senior subordinated notes on May 1 and November 1. Interest accrues from the most recent date to which interest has been paid or, if no interest has been paid, the issue date of the notes. Guarantees Each of our 100% owned domestic subsidiaries that guarantees the obligations under our senior secured credit facilities are initially jointly and severally, fully and unconditionally guaranteeing the senior notes on a senior unsecured basis and the senior subordinated notes on an unsecured senior subordinated basis. Ranking The senior notes are our senior unsecured obligations and: rank senior in right of payment to our future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior notes, including the senior subordinated notes; rank equally in right of payment to all of our existing and future senior debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the senior notes; and are effectively subordinated in right of payment to all of our existing and future secured debt including obligations under our senior secured credit facilities and the 4.875% senior notes due 2014 (referred to in this prospectus as the senior secured notes ), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of each of our subsidiaries that is not a guarantor of the senior notes. Table of Contents Similarly, the guarantees of the senior notes are senior unsecured obligations of the guarantors and: rank senior in right of payment to all of the applicable guarantor s future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior notes, including such guarantor s guarantee under the senior subordinated notes; rank equally in right of payment to all of the applicable guarantor s existing and future senior debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the senior notes; and are effectively subordinated in right of payment to all of the applicable guarantor s existing and future secured debt (including such guarantor s guarantee under our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of any subsidiary of a guarantor if that subsidiary is not also a guarantor of the senior notes. The senior subordinated notes are our unsecured senior subordinated obligations and: rank senior in right of payment to our existing and future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior subordinated notes; rank equally in right of payment to any or all of our future senior subordinated debt; are subordinated in right of payment to all of our existing and future senior debt (including our senior secured credit facilities, the senior secured notes and the senior notes); and are effectively subordinated in right of payment to all of our existing and future secured debt (including our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of each of our subsidiaries that is not a guarantor of the senior subordinated notes. Similarly, the guarantees of the senior subordinated notes are unsecured senior subordinated obligations of the guarantors and: rank senior in right of payment to all of the applicable guarantor s existing and future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior subordinated notes; rank equally in right of payment to all of the applicable guarantor s existing and future senior subordinated debt; Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 31, 2013 PRELIMINARY PROSPECTUS SunGard Data Systems Inc. 7 3/8% Senior Notes due 2018 7 5/8% Senior Notes due 2020 6.625% Senior Subordinated Notes due 2019 The 7 3/8% Senior Notes due 2018 (the senior notes due 2018 ) were issued in exchange for the 7 3/8% Senior Notes due 2018 originally issued on November 16, 2010. The 7 5/8% Senior Notes due 2020 (the senior notes due 2020) were issued in exchange for the 7 5/8% Senior Notes due 2020 originally issued on November 16, 2010. The 6.625% Senior Subordinated Notes due 2019 (the senior subordinated notes ) were issued in exchange for the 6.625% Senior Subordinated Notes due 2019 originally issued on November 1, 2012. The senior notes due 2018, the senior notes due 2020 (collectively, the senior notes ) and the senior subordinated notes are collectively referred to herein as the notes, unless the context otherwise requires. The senior notes due 2018 bear interest at a rate of 7 3/8% per annum and mature on November 15, 2018. The senior notes due 2020 bear interest at a rate of 7 5/8% per annum and mature on November 15, 2020. Interest on the senior notes due 2018 and the senior notes due 2020 is payable on May 15 and November 15 of each year, beginning November 15, 2011. The senior subordinated notes bear interest at a rate of 6.625% per annum and mature on November 1, 2019. Interest on the senior subordinated notes due 2019 is payable on May 1 and November 1 of each year, beginning on November 1, 2013. We may redeem some or all of the notes at any time at the redemption prices set forth in this prospectus. The senior notes are our senior unsecured obligations and rank equal in right of payment to all of our existing and future senior indebtedness. The senior subordinated notes are our unsecured senior subordinated obligations and are subordinated in right of payment to all of our existing and future senior indebtedness, including the senior secured credit facilities, the existing senior notes and the senior notes offered hereby. Each of our 100% owned domestic subsidiaries that guarantees our senior secured credit facilities are initially unconditionally guaranteeing the senior notes with guarantees that rank equal in right of payment to all of the senior indebtedness of such subsidiary, and are initially unconditionally guaranteeing the senior subordinated notes with guarantees that are subordinated in right of payment to all existing and future senior indebtedness of such subsidiary. The notes and the guarantees are effectively subordinated to our existing and future secured indebtedness and that of the guarantors to the extent of the assets securing such indebtedness. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. See Risk Factors beginning on page 11 for a discussion of certain risks that you should consider before investing in the notes. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the notes or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and other affiliates of The Goldman Sachs Group, Inc. in connection with offers and sales of the notes related to market-making transactions in the notes effected from time to time. Such affiliates of The Goldman Sachs Group, Inc. may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2013. Table of Contents are subordinated in right of payment to all of the applicable guarantor s existing and future senior debt (including such guarantor s guarantee under our senior secured credit facilities, the senior secured notes and the senior notes) and other obligations that are not, by their terms, expressly subordinated in right of payment to the senior subordinated notes; and are effectively subordinated in right of payment to all of the applicable guarantor s existing and future secured debt (including such guarantor s guarantee under our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of any subsidiary of a guarantor if that subsidiary is not also a guarantor of the senior subordinated notes. As of March 31, 2013, (1) the notes and related guarantees ranked effectively junior to approximately $3,949 million of senior secured indebtedness (which includes $250 million face amount of our senior secured notes that are recorded at $247 million and $200 million under our receivables facility which is secured by accounts receivable of our subsidiaries that participate in the facility), (2) the senior notes and related guarantees ranked senior to the $1,000 million of senior subordinated notes, (3) the senior subordinated notes and related guarantees ranked junior to the senior indebtedness under the senior secured credit facilities, the senior secured notes, the senior notes, the receivables facility and $13 million of payment obligations relating to foreign bank debt and capital lease obligations, all of which totaled approximately $5,562 million, (4) we had an additional $828 million of unutilized capacity under our revolving credit facility, after giving effect to certain outstanding letters of credit and (5) our non-guarantor subsidiaries had approximately $211 million (of the $5,562 million described above), which relates to the receivables facility and payment obligations relating to foreign bank debt and capital lease obligations. Optional Redemption Prior to November 15, 2013, we have the option to redeem the senior notes due 2018, in whole or in part, at a price equal to 100% of their principal amount plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium, as described under Description of Senior Notes due 2018 Optional Redemption. Beginning on November 15, 2013, we may redeem some or all of the senior notes due 2018 at the redemption prices listed under Description of Senior Notes Due 2018 Optional Redemption plus accrued and unpaid interest on the senior notes due 2018, if any, to the date of redemption. Prior to November 15, 2015, we have the option to redeem the senior notes due 2020, in whole or in part, at a price equal to 100% of their principal amount plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium, as described under Description of Senior Notes due 2020 Optional Redemption. Table of Contents You should rely only on the information contained in this prospectus or incorporated by reference into this prospectus. We have not authorized anyone to provide you with different information from that contained in, or incorporated by reference into, this prospectus. The prospectus may be used only for the purposes for which it has been published and no person has been authorized to give any information not contained or incorporated by reference herein. If you receive any other information, you should not rely on it. We are not making an offer of these securities in any state where the offer is not permitted. You should assume that the information in this prospectus or incorporated by reference into this prospectus is accurate only as of the date on the front cover, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, prospects, financial condition and results of operations may have changed since that date. 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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you in making your investment decision. You should read the entire prospectus, including the financial data and related notes and section entitled Risk Factors, before making an investment decision. Unless the context otherwise indicates, as used in this prospectus, the terms SunGard, we, our, us, and the company and similar terms refer to SunGard Data Systems Inc. and its subsidiaries on a consolidated basis. Some of the statements in this prospectus constitute forward-looking statements. See Forward-Looking Statements. Our Company We are one of the world s leading software and technology services companies. We provide software and technology services to financial services, education and public sector organizations. We also provide disaster recovery services, managed services, information availability consulting services and business continuity management software. We serve approximately 25,000 customers in more than 70 countries. Our high quality software solutions, excellent customer support and specialized technology services result in strong customer retention rates across all of our business segments and create long-term customer relationships. We operate our business in three segments: Financial Systems ( FS ), Availability Services ( AS ) and Public Sector & Education ( PS&E ), which is comprised of our Public Sector business ( PS ) and our K-12 Education business ( K-12 ). On January 19 and 20, 2012, the Company completed the sale of its Higher Education ( HE ) business, which is included in discontinued operations for purposes of this prospectus. FS provides mission-critical software and technology services to virtually every type of financial services institution, including buy-side and sell-side institutions, third-party administrators, wealth managers, retail banks, insurance companies, corporate treasuries and energy trading firms. Our broad range of complementary software solutions and associated technology services help financial services institutions automate the business processes associated with trading, managing portfolios and accounting for investment assets. AS provides disaster recovery services, managed services, information availability consulting services and business continuity management software to more than 8,000 customers in North America and Europe. With five million square feet of data center and operations space, AS assists IT organizations across virtually all industry and government sectors to prepare for and recover from emergencies by helping them minimize their computer downtime and optimize their uptime. Through direct sales and channel partners, AS helps organizations ensure their people and customers have uninterrupted access to the information systems they need in order to do business. PS&E (PS and K-12) provides software and technology services designed to meet the specialized needs of local, state and federal governments, public safety and justice agencies, public and private schools, utilities, nonprofits and other public sector institutions. We were acquired in August 2005 in a leveraged buy-out ( LBO ) by a consortium of private equity investment funds associated with Bain Capital Partners, The Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co., Providence Equity Partners, Silver Lake and TPG (collectively, the Sponsors ). As a result of the LBO, we are highly leveraged and our equity is not publicly traded. Our Sponsors continually evaluate various strategic alternatives with respect to the Company. There can be no assurance that we will ultimately pursue any strategic alternatives with respect to any business segment, or, if we do, what the structure or timing for any such transaction would be. Table of Contents Table of Additional Registrant Guarantors Exact Name of Registrant Guarantor as Specified in its Charter State or Other Jurisdiction of Incorporation or Organization I.R.S. Employer Identification Number Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant Guarantor s Principal Executive Offices Advanced Portfolio Technologies, Inc. Delaware 22-3245876 340 Madison Avenue 8th Floor New York, NY 10173 Automated Securities Clearance LLC Delaware 22-3701255 545 Washington Blvd. 7th Floor Jersey City, NJ 07310 GL Trade Overseas, Inc. Delaware 06-1414402 340 Madison Avenue New York, NY 10173 Inflow LLC Delaware 84-1439489 680 E. Swedesford Rd. Wayne, PA 19087 Online Securities Processing Inc. Delaware 77-0589377 680 E. Swedesford Rd. Wayne, PA 19087 SIS Europe Holdings LLC Delaware 41-1511643 680 E. Swedesford Rd. Wayne, PA 19087 SRS Development Inc. Delaware 23-2746281 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Ambit LLC Delaware 04-2766162 100 High Street 19th Floor Suffolk, MA 02110 SunGard Asia Pacific Inc. Delaware 51-0370861 601 Walnut St. Suite 1010 Philadelphia, PA 19106 SunGard Availability Services LP Pennsylvania 23-2106195 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Availability Services Ltd. Delaware 23-3024711 680 E. Swedesford Rd. Wayne, PA 19087 SunGard AvantGard LLC California 95-3440473 23975 Park Sorrento 4th Floor Calabasas, CA 91302 SunGard Business Systems LLC Delaware 23-2139612 377 E. Butterfield Road Suite 800 Lombard, IL 60148 SunGard Computer Services LLC Delaware 68-0499469 600 Laurel Road Voorhees, NJ 08043 SunGard Consulting Services LLC Delaware 87-0727844 10375 Richmond Suite 700 Houston, TX 77042 SunGard CSA LLC Delaware 20-4280640 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Development Corporation Delaware 23-2589002 680 E. Swedesford Rd. Wayne, PA 19087 Table of Contents Corporate Information SunGard Data Systems Inc. was incorporated under Delaware law in 1982. Our principal executive offices are located at 680 East Swedesford Road, Wayne, Pennsylvania 19087. Our telephone number is (484) 582-2000. Our corporate website is located at www.sungard.com. The information on, or accessible through, our corporate website is not a part of, or incorporated by reference in, this prospectus. Incorporation By Reference The SEC allows us to incorporate by reference the information we file with them into this prospectus. See Incorporation by Reference. Table of Contents Exact Name of Registrant Guarantor as Specified in its Charter State or Other Jurisdiction of Incorporation or Organization I.R.S. Employer Identification Number Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant Guarantor s Principal Executive Offices SunGard DIS Inc. Delaware 23-2829670 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Energy Systems Inc. Delaware 13-4081739 601 Walnut St. Suite 1010 Philadelphia, PA 19106 SunGard eProcess Intelligence LLC Delaware 13-3217303 600 Lanidex Plaza Parsippany, NJ 07054 SunGard Financial Systems LLC Delaware 23-2585361 3 Van de Graff Drive Burlington, MA 01803-5148 SunGard Investment Systems LLC Delaware 23-2115509 377 E. Butterfield Road Suite 800 Lombard, IL 60148 SunGard Investment Ventures LLC Delaware 51-0297001 680 E. Swedesford Road Wayne, PA 19087 SunGard iWORKS LLC Delaware 23-2814630 11560 Great Oaks Way Suite 200 Alpharetta, GA 30022 SunGard iWORKS P&C (US) Inc. Delaware 13-3248040 200 Business Park Dr. Armonk, NY 10504 SunGard Kiodex LLC Delaware 13-4100480 59 Maiden Lane, 32nd Floor New York, NY 10038-4624 SunGard NetWork Solutions Inc. Delaware 23-2981034 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Public Sector Inc. Florida 59-2133858 1000 Business Center Drive Lake Mary, FL 32746 SunGard Reference Data Solutions LLC Delaware 72-1571745 340 Madison Avenue 8th Floor New York, NY 10173 SunGard SAS Holdings Inc. Delaware 26-0052190 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Securities Finance LLC Delaware 13-3799258 14 Manor Parkway Salem, NH 03079 SunGard Securities Finance International LLC Delaware 13-3809371 14 Manor Parkway Salem, NH 03079 SunGard Shareholder Systems LLC Delaware 23-2025519 2300 Main Street Suite 400 Kansas City, MO 64108 SunGard Software, Inc. Delaware 51-0287708 680 E. Swedesford Road Wayne, PA 19087 SunGard Systems International Inc. Pennsylvania 23-2490902 340 Madison Avenue 8th Floor New York, NY 10173 Table of Contents The Notes The summary below describes the principal terms of the notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The sections captioned Description of Senior Notes Due 2018, Description of Senior Notes Due 2020 and Description of Senior Subordinated Notes in this prospectus contain a more detailed description of the terms and conditions of the notes. Issuer SunGard Data Systems Inc. Securities Offered 7 3/8% Senior Notes due 2018. 7 5/8% Senior Notes due 2020. 6.625% Senior Subordinated Notes due 2019. Maturity The senior notes due 2018 mature on November 15, 2018. The senior notes due 2020 mature on November 15, 2020. The senior subordinated notes mature on November 1, 2019. Interest Rate The senior notes due 2018 bear interest at a rate of 7 3/8% per annum. The senior notes due 2020 bear interest at a rate of 7 5/8% per annum. The senior subordinated notes bear interest at a rate of 6.625% per annum. Interest Payment Dates We pay interest on the senior notes due 2018 and the senior notes due 2020 on May 15 and November 15 and on the senior subordinated notes on May 1 and November 1. Interest accrues from the most recent date to which interest has been paid or, if no interest has been paid, the issue date of the notes. Guarantees Each of our 100% owned domestic subsidiaries that guarantees the obligations under our senior secured credit facilities are initially jointly and severally, fully and unconditionally guaranteeing the senior notes on a senior unsecured basis and the senior subordinated notes on an unsecured senior subordinated basis. Ranking The senior notes are our senior unsecured obligations and: rank senior in right of payment to our future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior notes, including the senior subordinated notes; rank equally in right of payment to all of our existing and future senior debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the senior notes; and are effectively subordinated in right of payment to all of our existing and future secured debt including obligations under our senior secured credit facilities and the 4.875% senior notes due 2014 (referred to in this prospectus as the senior secured notes ), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of each of our subsidiaries that is not a guarantor of the senior notes. Table of Contents Similarly, the guarantees of the senior notes are senior unsecured obligations of the guarantors and: rank senior in right of payment to all of the applicable guarantor s future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior notes, including such guarantor s guarantee under the senior subordinated notes; rank equally in right of payment to all of the applicable guarantor s existing and future senior debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the senior notes; and are effectively subordinated in right of payment to all of the applicable guarantor s existing and future secured debt (including such guarantor s guarantee under our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of any subsidiary of a guarantor if that subsidiary is not also a guarantor of the senior notes. The senior subordinated notes are our unsecured senior subordinated obligations and: rank senior in right of payment to our existing and future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior subordinated notes; rank equally in right of payment to any or all of our future senior subordinated debt; are subordinated in right of payment to all of our existing and future senior debt (including our senior secured credit facilities, the senior secured notes and the senior notes); and are effectively subordinated in right of payment to all of our existing and future secured debt (including our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of each of our subsidiaries that is not a guarantor of the senior subordinated notes. Similarly, the guarantees of the senior subordinated notes are unsecured senior subordinated obligations of the guarantors and: rank senior in right of payment to all of the applicable guarantor s existing and future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior subordinated notes; rank equally in right of payment to all of the applicable guarantor s existing and future senior subordinated debt; Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 31, 2013 PRELIMINARY PROSPECTUS SunGard Data Systems Inc. 7 3/8% Senior Notes due 2018 7 5/8% Senior Notes due 2020 6.625% Senior Subordinated Notes due 2019 The 7 3/8% Senior Notes due 2018 (the senior notes due 2018 ) were issued in exchange for the 7 3/8% Senior Notes due 2018 originally issued on November 16, 2010. The 7 5/8% Senior Notes due 2020 (the senior notes due 2020) were issued in exchange for the 7 5/8% Senior Notes due 2020 originally issued on November 16, 2010. The 6.625% Senior Subordinated Notes due 2019 (the senior subordinated notes ) were issued in exchange for the 6.625% Senior Subordinated Notes due 2019 originally issued on November 1, 2012. The senior notes due 2018, the senior notes due 2020 (collectively, the senior notes ) and the senior subordinated notes are collectively referred to herein as the notes, unless the context otherwise requires. The senior notes due 2018 bear interest at a rate of 7 3/8% per annum and mature on November 15, 2018. The senior notes due 2020 bear interest at a rate of 7 5/8% per annum and mature on November 15, 2020. Interest on the senior notes due 2018 and the senior notes due 2020 is payable on May 15 and November 15 of each year, beginning November 15, 2011. The senior subordinated notes bear interest at a rate of 6.625% per annum and mature on November 1, 2019. Interest on the senior subordinated notes due 2019 is payable on May 1 and November 1 of each year, beginning on November 1, 2013. We may redeem some or all of the notes at any time at the redemption prices set forth in this prospectus. The senior notes are our senior unsecured obligations and rank equal in right of payment to all of our existing and future senior indebtedness. The senior subordinated notes are our unsecured senior subordinated obligations and are subordinated in right of payment to all of our existing and future senior indebtedness, including the senior secured credit facilities, the existing senior notes and the senior notes offered hereby. Each of our 100% owned domestic subsidiaries that guarantees our senior secured credit facilities are initially unconditionally guaranteeing the senior notes with guarantees that rank equal in right of payment to all of the senior indebtedness of such subsidiary, and are initially unconditionally guaranteeing the senior subordinated notes with guarantees that are subordinated in right of payment to all existing and future senior indebtedness of such subsidiary. The notes and the guarantees are effectively subordinated to our existing and future secured indebtedness and that of the guarantors to the extent of the assets securing such indebtedness. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. See Risk Factors beginning on page 11 for a discussion of certain risks that you should consider before investing in the notes. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the notes or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and other affiliates of The Goldman Sachs Group, Inc. in connection with offers and sales of the notes related to market-making transactions in the notes effected from time to time. Such affiliates of The Goldman Sachs Group, Inc. may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2013. Table of Contents are subordinated in right of payment to all of the applicable guarantor s existing and future senior debt (including such guarantor s guarantee under our senior secured credit facilities, the senior secured notes and the senior notes) and other obligations that are not, by their terms, expressly subordinated in right of payment to the senior subordinated notes; and are effectively subordinated in right of payment to all of the applicable guarantor s existing and future secured debt (including such guarantor s guarantee under our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of any subsidiary of a guarantor if that subsidiary is not also a guarantor of the senior subordinated notes. As of March 31, 2013, (1) the notes and related guarantees ranked effectively junior to approximately $3,949 million of senior secured indebtedness (which includes $250 million face amount of our senior secured notes that are recorded at $247 million and $200 million under our receivables facility which is secured by accounts receivable of our subsidiaries that participate in the facility), (2) the senior notes and related guarantees ranked senior to the $1,000 million of senior subordinated notes, (3) the senior subordinated notes and related guarantees ranked junior to the senior indebtedness under the senior secured credit facilities, the senior secured notes, the senior notes, the receivables facility and $13 million of payment obligations relating to foreign bank debt and capital lease obligations, all of which totaled approximately $5,562 million, (4) we had an additional $828 million of unutilized capacity under our revolving credit facility, after giving effect to certain outstanding letters of credit and (5) our non-guarantor subsidiaries had approximately $211 million (of the $5,562 million described above), which relates to the receivables facility and payment obligations relating to foreign bank debt and capital lease obligations. Optional Redemption Prior to November 15, 2013, we have the option to redeem the senior notes due 2018, in whole or in part, at a price equal to 100% of their principal amount plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium, as described under Description of Senior Notes due 2018 Optional Redemption. Beginning on November 15, 2013, we may redeem some or all of the senior notes due 2018 at the redemption prices listed under Description of Senior Notes Due 2018 Optional Redemption plus accrued and unpaid interest on the senior notes due 2018, if any, to the date of redemption. Prior to November 15, 2015, we have the option to redeem the senior notes due 2020, in whole or in part, at a price equal to 100% of their principal amount plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium, as described under Description of Senior Notes due 2020 Optional Redemption. Table of Contents You should rely only on the information contained in this prospectus or incorporated by reference into this prospectus. We have not authorized anyone to provide you with different information from that contained in, or incorporated by reference into, this prospectus. The prospectus may be used only for the purposes for which it has been published and no person has been authorized to give any information not contained or incorporated by reference herein. If you receive any other information, you should not rely on it. We are not making an offer of these securities in any state where the offer is not permitted. You should assume that the information in this prospectus or incorporated by reference into this prospectus is accurate only as of the date on the front cover, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, prospects, financial condition and results of operations may have changed since that date. TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY
+ 
+
+ To understand this offering fully, you should read the entire prospectus carefully, including the risk factors beginning on page 10 and the financial statements.
+ 
+
+ General
+ VelaTel Global Communications, Inc. was incorporated under the laws of the state of Nevada on September 19, 2005 under the name Mortlock Ventures, Inc. for the purpose of acquiring and developing mineral properties. On April 8, 2008, Mortlock Ventures changed its name to China Tel Group, Inc. and began focusing on the telecommunications industry. On July 5, 2011, we filed an amendment that changed our name to VelaTel Global Communications, Inc., to reflect more accurately the global nature of our businesses and objectives. 
+ 
+
+ On July 10, 2012, the board of directors approved a reverse 100 for 1 stock split of its issued and outstanding common shares. On July 10, 2012, the board approved an increase in the number of authorized Series A common shares and Series B common shares available for issuance to 1,000,000,000 Series A common shares and 100,000,000 Series B common shares.
+ 
+
+ Operations
+ The Company currently holds investments or contracts in nine projects that we refer to as: 
+ (i) VelaTel Peru Network; 
+ (ii) VN Tech Fuel Cell Business; 
+ (iii) Exclusive Services Agreement with NGSN; 
+ (iv) Exclusive Services Agreement with Aerostrong; 
+ (v) Sino Crossings Fiber Joint Venture; 
+ (vi) Zapna Voice Applications; 
+ (vii) Novi-Net Network; and 
+ (viii) Montenegro Connect Network; and
+ (ix) China Motion MVNO Network. 
+ 
+
+ The Company s primary business model is to combine its engineering and deployment expertise, its equity funding relationships, its vendor partnership, radio frequency spectrum, fiber optic cable and concession rights assets acquired through a subsidiary or a joint venture relationship to create and operate wireless broadband access networks worldwide. We offer or will offer internet access, voice, video, and data services to the subscribers of the various WBA networks we own, operate or deploy. The Company s secondary business model is to distribute products and services used in 
+ 
+
+ 6
+ 
+
+ 
+
+ connection with WBA networks, specifically hydrogen fuel cells used as a back-up power source for certain transmission equipment and devices and services that enable lower cost voice long distance and voice and data roaming fees to subscribers of cellular, voice over internet protocol or WBA networks. 
+ 
+
+ The Company s present operational focus is on the deployment of WBA networks in emerging international markets, using either 2.5 GHz or 3.5 GHz radio frequency spectrum. 
+ 
+ The Offering
+ This prospectus relates to the resale of up to 32,000,000 Series A common shares by Selling Stockholder. The Series A common shares are issuable upon conversion of Series B preferred shares held by Selling Stockholder. 
+ 
+
+ Common Shares 
+ Outstanding
+ 124,445,928 Series A common shares and 40,000,000 Series B common shares 
+ 
+
+ Common shares 
+ being offered 
+ by Selling 
+ Stockholder 
+ 32,000,000 Series A common shares
+ 
+
+ Common shares 
+ outstanding after 
+ offering
+ 156,445,928 Series A common shares and 40,000,000 Series B common shares
+ 
+
+ 
+
+ 7
+ 
+
+ Market for our 
+ common stock
+ Our Series A common shares are quoted on the OTC Link quotation platform of OTC Markets Group, Inc. under the symbol VELA.QB. The liquidity of our common stock is restricted, as our common stock falls within the definition of a penny stock.
+ 
+
+ Use of Proceeds:
+ We will not receive any proceeds from the sale of the Series A common shares by Selling Stockholder. However, we will receive proceeds from the sale of securities pursuant to the stock purchase agreement for the 1,200 Series B preferred shares. The proceeds received under the stock purchase agreement will be used for payment of general corporate and operating expenses.
+ 
+
+ Penny Stock 
+ Regulation
+ The liquidity of our Series A common shares is restricted as our common stock falls within the definition of a penny stock. These requirements may restrict the ability of broker/dealers to sell the Company s Series A common shares, and may affect the ability to resell the Company s common stock.
+ 
+
+ STOCK PURCHASE AGREEMENT AND
+ REGISTRATION RIGHTS AGREEMENT
+ 
+
+ On December 14, 2012, the Company entered into a stock purchase agreement with Selling Stockholder. 
+ 
+
+ The initial closing under the stock purchase agreement, pursuant to which the Company sold to Selling Stockholder 60 Series B preferred shares for a purchase price of $600,000, and also issued to Selling Stockholder 60 Series B preferred shares as a commitment fee, occurred on December 17, 2012. 
+ 
+
+ Subsequent closings under the stock purchase agreement will occur in tranches of 60 Series B preferred shares, on the first day of each calendar month (or earlier, at the Company s option), following satisfaction of certain conditions set forth in the stock purchase agreement including a registration statement, covering at least the number of shares reasonably necessary for the conversion of all Series B preferred shares then outstanding and to be issued at such subsequent closing, being current and effective, and at least $3 million in aggregate trading volume since the prior closing under the stock purchase agreement. 
+ 
+
+ On January 25, 2013, the Company entered into an Amendment to Stock Purchase Agreement with Selling Stockholder. The amendment amended the terms of the stock purchase agreement between the Company and Selling Stockholder dated December 14, 2012 to provide that Selling Stockholder may not assign any or all of its rights under the stock purchase agreement.
+ 8
+ In connection with the stock purchase agreement, on December 14, 2012, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series B Preferred Stock with the Secretary of State of Nevada. Under the Certificate of Designation, the Series B preferred shares rank senior with respect to dividend and rights upon liquidation to the Company s common stock and junior to all existing and future indebtedness. Except as otherwise required by law (or with respect to approval of certain actions), the Series B preferred shares shall have no voting rights. Holders of Series B preferred shares are entitled to cumulative dividends at a rate of 2.5% per annum when and if declared by the Board of Directors in its sole discretion. 
+ 
+
+ The Series B preferred shares may be converted into Series A common shares at the option of the Company (subject to the satisfaction of certain Equity Conditions set forth in the Certificate of Designation, or if the closing price of the common stock exceeds 200% of the conversion price of $0.20 for any 20 consecutive trading days) or of the holder. In the event of a conversion at the election of the holder or the Company, the Company shall issue to the holder such number of shares of common stock equal to: 
+ (a) the Early Redemption Price (as defined in the Certificate of Designation), multiplied by 
+ (b) the number of shares being converted, divided by (c) the conversion price of $0.20. 
+ 
+
+ Unless the Company has received the approval of the holders of a majority of the Series B preferred shares then outstanding, the Company may not 
+ 
+
+ (i) alter or change adversely the powers, preferences or rights of the holders of the Series B preferred shares or alter or amend the Certificate of Designation; 
+ (ii) authorize or create any class of stock ranking senior as to distribution of dividends senior to the Series B preferred shares; 
+ (iii) amend its certificate of incorporation in breach of any provisions of the Certificate of Designation; 
+ (iv) increase the authorized number of Series B preferred shares; or 
+ (v) liquidate, or wind-up the business and affairs of the Company or effect any Deemed Liquidation Event, as defined in the Certificate of Designation. 
+ 
+ Upon or after 18 years after the Issuance Date, the Company will have the right to redeem 100% of the Series B preferred shares at a price of $10,000 per share plus any accrued and unpaid dividends. The Company is also permitted to redeem the Series B preferred shares at any time after issuance at a price per share equal to the sum of the following: 
+ 
+
+ (a) the Corporation Redemption Price, plus 
+ (b) the Embedded Derivative Liability (as defined in the Certificate of Designation), less 
+ (c) any dividends that have been paid. 
+ 
+
+ 9
+ The Certificate of Designation also provides for mandatory redemption if the Company determines to liquidate, dissolve or wind-up its business or effects any Deemed Liquidation Event. 
+ 
+
+ In connection with the stock purchase agreement, the Company entered into a registration rights agreement, and an amendment thereto, pursuant to which the Company agreed to register the shares of common stock issuable upon conversion of the Series B preferred shares issuable under the stock purchase agreement. The Company agreed to file such registration statement on or before January 13, 2013 and to use its best efforts to have such registration statement declared effective on or before the 90th day thereafter. 
+ 
+
+ This prospectus includes 32,000,000 Series A common shares issuable upon conversion of Series B preferred shares. The amount of Series A common shares included in this prospectus was determined based on one-third of the Company s public float as of January 27, 2013. As of January 27, 2013, the corresponding number of overlying shares of Series B preferred shares is equal to 640. This number of overlying shares of Series B preferred shares will vary with the market price of the Series B preferred shares. 
+ 
+
+ 
+
+ RISK FACTORS
+ 
+
+ Our business is subject to numerous risk factors, including the following:
+ 
+
+ We may not be able to pay our current obligations. Our auditors have issued a going concern opinion with respect to our financial statements. If we are not able to raise substantial additional capital in a timely manner we may be forced to cease operations.
+ 
+ We will require substantial additional capital to finance our planned business operations and expect to incur operating losses in future periods, due to the expense of deploying the projects. We have not realized material revenue since our inception and cannot assure you that we will be successful in generating revenues in the future. Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months.
+ 
+
+ If we are not able to raise substantial additional capital in a timely manner from the Selling Stockholder or other sources, we may lose our rights to participate in the operation of and/or the deployment of all of the WBA networks. In each case, we may be 
+ 
+
+ 10
+ 
+
+ forced to cease operations. Moreover, any agreement we may enter into for additional capital may discourage other equity investments during the term of any such agreement. 
+ 
+ We are an unproven company and should be considered speculative and highly risky to investors.
+ 
+ The Company has only recently embarked on the business plans and strategies described in this prospectus. Potential investors should be aware of the risk and difficulties encountered by a new enterprise in the WBA business in, especially in view of the intense competition from existing businesses in the same industry sector.
+ 
+
+ We currently do not have the funds necessary to conduct any meaningful business activity. As of September 30, 2012, we had $280,032 of cash and $26,385,920 in current liabilities. Since our inception, we have incurred accumulated losses of $(263,130,585). We are currently in default on the payment of principal of approximately $300,000 of our convertible note purchase agreements and on our amended and restated convertible note purchase agreements. During the year ended December 31, 2009, three judgments were entered against the Company relating to certain convertible notes in default. The judgments are accruing interest at rates between 3.6% and 10% per annum. Accordingly, the carrying value of the convertible notes, accrued interest and legal fees on the judgments are recorded at $882,858 and $768,875 as of September 30, 2012 and December 31, 2011, respectively. The principal balance of the three judgments totaled $829,893 as of September 30, 2012 and December 31, 2011. In addition, the Company currently owes approximately $5.9 million in principal in default to the Isaac Organization, Inc.
+ 
+ The Company has a lack of revenue history, and investors cannot view the Company s past performance since it is a start-up company.
+ 
+ There is no assurance that the Company s intended activities will be successful or result in significant revenue or profit to the Company. We face all risks that are associated with any new business, such as under-capitalization, insufficient cash flow and personnel, financial and resource limitations, as well as special risks associated with its proposed operations. There is no assurance that we will be successful in implementing our business plans and strategies.
+ 
+ The Company has no meaningful operating history and minimal assets that may impair our ability to raise capital and to sustain operations, which could cause failure of the Company.
+ 
+ The Company is considered a start-up operation and, as such, it has no material operating history, little revenue and little earnings from operations. We have minimal assets and limited financial resources. We will continue to sustain operating expenses 
+ 
+
+ 11
+ 
+
+ 
+
+ without corresponding revenues, at least until we further develop the projects, which is not expected to occur until we receive sufficient proceeds from additional capital raising. The Company has incurred a net operating loss that will continue until we more fully implement our business plans and strategies, and are producing sufficient revenues to break even. There can be no assurance that our operations will become profitable in the near future or at all.
+ 
+ The limited operating history or lack thereof may not serve as an adequate basis to judge the future prospects and results of operations of our operating subsidiaries and joint venture partners.
+ 
+ Each of the projects has a limited or no operating history providing WBA services, fiber services and/or related products that enable providers of such services to connect to their respective networks. Accordingly, one cannot evaluate the viability and sustainability of their businesses. You should consider their future prospects in light of the risks and uncertainties that other companies operating in the same markets with limited or nor operating history have experienced. Some of these risks and uncertainties relate to their ability to, among other things, include the following:
+ 
+
+ (i)
+ attract, retain and motivate qualified personnel;
+ (ii)
+ maintain effective control of their costs and expenses;
+ (iii)
+ expand their market share; and
+ (iv)
+ raise sufficient capital to sustain and expand their businesses.
+ 
+
+ If they are unsuccessful in addressing any of these risks and uncertainties, their competitiveness and their future growth, as well as ours, would be adversely affected.
+ 
+
+ The registration and potential sale, pursuant to this prospectus, by Selling Stockholder of a significant number of Series A common shares could depress the price of our common stock.
+ 
+
+ Because there is a limited public market for our common stock, there may be significant downward pressure on our stock price caused by the sale or potential sale of a significant number of Series A common shares pursuant to this prospectus, which could allow short sellers of our stock an opportunity to take advantage of any decrease in the value of our stock. The presence of short sellers in our common stock may further depress the price of our common stock.
+ 
+
+ If Selling Stockholder sells a significant number of Series A common shares, the market price of our common stock may decline. Furthermore, the sale or potential sale of the offered Series A common shares pursuant to the prospectus and the depressive effect of such sales or potential sales could make it difficult for us to raise funds from other sources.
+ 
+
+ 12
+ 
+
+ We are registering the resale of a maximum of 32,000,000 Series A common shares issuable upon conversion of Selling Stockholder s Series B preferred shares. The resale of such Series A common shares by Selling Stockholder could depress the market price of our common shares.
+ 
+
+ We are registering the resale of a maximum of 32,000,000 Series A common shares under the registration statement of which this prospectus forms a part. The sale of these Series A common shares into the public market by Selling Stockholder could depress the market price of our common shares. As of January 30, 2013, there were 124,445,928 Series A common shares issued and outstanding. The sale of additional Series A common shares into the public market by Selling Stockholder could further depress the market price of our common stock. 
+ 
+
+ Existing stockholders could experience substantial dilution upon the issuance of Series A common shares upon conversion of the Series B preferred shares.
+ 
+
+ Our agreement with the Selling Stockholder contemplates our issuance of up to at least 60,000,000 Series A common shares to Selling Stockholder, subject to certain restrictions and obligations. If the terms and conditions of the stock purchase agreement are satisfied, and all of Series B preferred shares are sold and converted into Series A common shares, our existing stockholders' ownership will be diluted by such sales.
+ 
+
+ Selling Stockholder will pay less than the then-prevailing market price for our common stock under the stock purchase agreement and conversion provisions.
+ 
+
+ The Series A common shares to be issued to Selling Stockholder pursuant to the stock purchase agreement will be issued at a conversion price equal to $0.20 per Series A common share, subject to adjustment. Therefore, Selling Stockholder has a financial incentive to sell our common shares upon receiving the Series A common shares to realize the profit equal to the difference between the discounted price and the market price. If Selling Stockholder sells the Series A common shares, the price of our Series A common shares could decrease.
+ 
+
+ We may not be able to access sufficient funds when needed.
+ 
+
+ Our ability to obtain funds from the sale of the Series B preferred shares is limited by the terms and conditions in the stock purchase agreement, including restrictions on when we may exercise our rights and restrictions on the amount we may obtain from Selling Stockholder at any one time, which is determined in part by the trading volume of our common stock. 
+ 
+
+ 13
+ 
+
+ 
+
+ Most of our executive officers and directors do not have experience in managing a public company. In addition, we have not established enough internal control procedures over our financial accounting.
+ 
+ Almost all of our executive officers and directors do not have the training or experience in managing and fulfilling the regulatory reporting obligations of a public company. We have to hire professionals to undertake these filing requirements, which will increase the overall cost of our operations. We have not yet established enough internal control procedures over our financial reporting.
+ 
+
+ The Company may have a shortage of working capital in the future that could jeopardize its ability to carry out our business plans and strategies.
+ 
+ The Company s capital needs consist primarily of operating overhead and funding the deployment of our networks and other businesses. At the present time, we have not raised enough capital to fully fund all of these projects. If we are unsuccessful in raising the needed capital, we may need to abandon one or more of our projects.
+ 
+ The Company may, in the future, issue debt having priority, which, if foreclosed, could cause loss of some or all of the Company s assets or business.
+ 
+ While management has no immediate plans to issue any securities that would have a higher priority in terms of repayment or be secured by Company assets than those unsecured convertible note purchase agreements and the amended and restated convertible note purchase agreements, collectively, convertible notes , previously sold, these plans may change in the future. In the event the Company defaults on its obligations to repay all sums due pursuant to the convertible notes, the holders of our convertible notes will have the same rights as any of the Company's other unsecured creditors, and the assets of the Company at that time may be insufficient to repay all of its creditors in full.
+ 
+
+ The Company may not be able to manage its growth effectively, which could adversely affect the Company s operations and financial performance.
+ 
+
+ The ability to manage and operate the Company s businesses as we execute our development and growth strategy will require effective planning. Significant rapid growth could strain our internal resources and exacerbate other problems that could adversely affect our financial performance. We expect that our efforts to grow will place a significant strain on our personnel, management systems, infrastructure and other resources in the immediate future. The ability to manage future growth effectively will also require the Company to successfully attract, train, motivate, retain, and manage new employees and continue to update and improve the Company s operational, financial and management controls and procedures. If we fail to manage our growth effectively, our operations could be adversely affected, resulting in slower growth and a failure to achieve or sustain profitability.
+ 14
+ We may not voluntarily implement various corporate governance measures, in the absence of which, stockholders may have reduced protections against insider director transactions, conflicts of interest and other matters.
+ 
+
+ At this time, we are not subject to any law, rule or regulation requiring that we adopt any of the corporate governance measures that are required by the rules of national securities exchanges or NASDAQ, such as independent directors and audit committees. It is possible that, if the Company were to adopt some or all of the corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.
+ 
+
+ The success of the Company s business is dependent on our ability to retain the Company s existing key employees and to add and retain senior officers to our management team.
+ 
+ Our success will depend largely on the expertise and reputation of George Alvarez, our chairman of the board and chief executive officer, and the other members of our senior management team, including Colin Tay, our president, Mario Alvarez, our chief operating officer, Carlos Trujillo, our chief financial officer, Kenneth L. Waggoner, our executive vice president legal, general counsel and secretary and Kenneth Hobbs, our vice president of mergers and acquisitions. With the exception of Mr. Tay, none of our senior management team is a party to an employment agreement. In addition, we intend to hire additional highly skilled individuals to staff our operations in each market where a project is being deployed and/or operated. Loss of any of our key personnel, or the inability to recruit and retain qualified individuals for our operations, could adversely affect our ability to implement our business strategy and operate our businesses.
+ 
+ We have contracted a significant amount of our operations through independent contractors; accordingly, this subjects us to a number of significant risks.
+ 
+ Since our acquisition of Trussnet Nevada, we have contracted with independent contractors to perform services, representing substantially all of our operations, including the engineering, architectural and deployment services we provide to the projects. If our independent contractors performed their services in an unsatisfactory manner, it would have a material adverse effect on our business. 
+ 
+ Our officers and directors own a substantial amount of our common stock and will be able to control the vote on matters submitted to our stockholders.
+ 
+ Our directors and officers collectively own 27,874,083 Series A common shares, representing approximately 22% of our outstanding Series A common shares. Our officers and directors collectively own or hold irrevocable proxies for 40,000,000 Series 
+ 15
+ 
+
+ B common shares, representing 100% of the outstanding Series B common shares. Series B common shareholders are entitled to ten votes per Series B common share on any issue presented to our shareholders. As a result, our officers and directors control the vote on any issue presented to the shareholders of the Company and can effect transactions without the consent of other shareholders. It is unlikely any shareholder or group of shareholders could replace the existing directors or officers. This concentration of beneficial ownership may also have the effect of delaying or preventing a change in control or being listed on a major stock exchange.
+ 
+
+ There may be limited liquidity for our Series A common shares, and our shareholders may have difficulty selling their Series A common shares.
+ 
+
+ Our Series A common shares are quoted on the OTC Link quotation platform of OTC Markets Group, Inc. However, due to the possibility of limited trading volume, our shareholders may not be able to sell their Series A common shares in an organized market. If this happens, our shareholders might not receive a price per Series A common share which they might have received had there been a larger public market for our Series A common shares.
+ 
+ Our Series A common shares are penny stocks and are covered by Section 15(g) of the Exchange Act. Federal securities laws impose additional sales practice requirements on broker/dealers who sell securities, such as;
+ 
+ (i)
+ the delivery of a standardized disclosure document; 
+ (ii)
+ disclosure and confirmation of the quotation process; 
+ (iii)
+ disclosure of compensation the broker/dealer receives; and 
+ (iv)
+ furnishing monthly account statements. 
+ 
+
+ For sales of our Series A common shares, the broker/dealer must make a special suitability determination and receive from its customer a written agreement prior to making a sale. The imposition of the foregoing additional sales practices could adversely affect a shareholder s ability to dispose of its, his or her Series A common shares.
+ 
+ Sales of our Series A common shares will dilute the interests of our existing shareholders.
+ 
+
+ We may seek additional funds through the sale of our Series A common shares. This will dilute the percentage ownership of our existing shareholders. The magnitude of this dilution will be determined by the number of Series A common shares we will have to issue in the future to obtain the funds required, in addition to the dilutive effect of Series A common shares that may be in payment of various promissory notes.
+ 
+
+ 
+
+ 
+
+ 16
+ The number of our authorized Series A common shares and our Series B Common Stock may discourage unsolicited takeover attempts.
+ 
+
+ The authorized Series A common shares, together with the number of our outstanding Series B common shares, may have the effect of discouraging unsolicited takeover attempts, potentially limiting the opportunity for our shareholders to dispose of their Series A common shares at a premium, which is often offered in takeover attempts or that may be available under a merger proposal.
+ 
+ The number of our authorized Series A common shares and our Series B common shares may make it impossible for our shareholders to change management of the Company.
+ 
+ The authorized Series A common shares, together with the number of our outstanding Series B common shares, may have the effect of permitting our current senior management, including the current members of our board of directors, to retain their positions and place them in a better position to resist changes that shareholders wish to make, if they are dissatisfied with the conduct of the Company s business.
+ 
+ Acquisitions, investments and other strategic transactions could result in operating difficulties, dilution and distractions from our core business.
+ 
+
+ We may enter into strategic transactions and acquisitions of other assets and businesses. Any such transactions can be risky, may require a disproportionate amount of our management and financial resources and may create unforeseen operating difficulties or expenditures, including, but not limited to:
+ 
+ (i)
+ difficulties in integrating acquired technologies and operations into our business, while maintaining uniform standards, controls, policies and procedures;
+ (ii)
+ obligations imposed by counterparties in such transactions that limit our ability to obtain additional financial funding or to complete our existing projects, or specific lines of business, or other aspects of their operational flexibility; and
+ (iii)
+ inability to predict or anticipate market developments and capital commitments relating to our projects, businesses or required technologies.
+ 
+
+ The anticipated benefit of any of our strategic transactions may never materialize. Future investments, acquisitions, dispositions or similar arrangements could result in dilutive issuances of our Series A common shares, the incurrence of debt, contingent liabilities, amortization expenses or write-offs of goodwill, any of which could harm our financial condition. Any such transactions may require us to obtain additional equity or debt financing, which may not be available on favorable terms or at all. We have experienced certain of these risks in connection with our acquisitions and investments in the past, and the occurrence of any of these risks in the future may have a material adverse effect on our business.
+ 
+
+ 17
+ 
+
+ If shareholders sought to sue our officers or directors, it may be difficult to obtain jurisdiction over the parties and access to the assets located in countries where our projects are being deployed and/or operated.
+ 
+
+ It may be difficult, if not impossible, to acquire jurisdiction over officers and directors of our subsidiaries or joint ventures residing outside of the United States, in the event that a lawsuit is initiated against such officers and directors by shareholders in the United States. It is also unclear if extradition treaties now in effect between the United States and China, Hong Kong, Peru, Croatia, Montenegro, Serbia, Denmark or other countries where our projects may be deployed and/or operated would permit effective enforcement of criminal penalties of federal securities laws. Furthermore, because a substantial amount of our assets are located in these countries, it would be extremely difficult to access those assets to satisfy an award entered against us in a United States court.
+ 
+
+ The industries in which we operate are continually evolving. Our services may become obsolete, and we may not be able to develop competitive services or products on a timely basis or at all.
+ 
+ The WBA, fiber optic telecommunications and fuel cell industries are characterized by rapid technological change, competitive pricing, frequent new services and product introductions, evolving industry standards and changing regulatory requirements. Our success will depend upon our ability to anticipate and adapt to these and other challenges and to offer competitive services on a timely basis. Failure to do so would have a material adverse effect upon our business.
+ 
+
+ Any or all of our projects may fail to attract a commercially viable number of subscribers or customers.
+ 
+ We have incurred significant obligations relating to the deployment of our projects. We expect to make significant further expenditures on equipment and construction expenses relating to the deployment of WBA networks and operations associated with our projects. If subscribership to these networks and/or revenue generated from these businesses is insufficient to make any particular venture commercially viable, this would have a material adverse effect upon our business.
+ 
+
+ Our operating subsidiaries and joint venture partners may not be granted the requisite licenses, permits or authorizations, or the renewals thereof, in order to operate their respective networks and/or businesses.
+ 
+ The regulatory authorities in the countries where we do business have significant discretion in granting licenses, permits and authorizations requisite for the operation of each of our operating subsidiaries and joint venture partners, and in determining the conditions for use of the frequencies and other public assets covered by their licenses, 
+ 
+
+ 18
+ 
+
+ permits and authorizations. The regulatory authorities in these countries may have no obligation to renew the licenses, permits and authorizations when they expire. As a result, these regulatory authorities may refuse to grant any licenses, permits or authorizations or renewals thereof. In addition, these regulatory authorities may impose conditions for use of the frequencies and other public assets covered by their licenses, permits and authorizations that would adversely affect our operating subsidiaries and joint venture partners in operating their respective networks and/or businesses. If any of our subsidiaries or joint venture partners do not receive their necessary licenses, permits and authorizations, they may have to cease operations or contract operations to third parties who hold the appropriate licenses, permits and authorizations. Additionally, even where a subsidiary or joint venture partner currently hold licenses, permits or authorizations or may successfully obtain new licenses, permits or authorizations in the future, they may be required to seek modifications to the licenses, permits or authorizations or the regulations applicable to the licenses, permits or authorizations to implement the Company s business strategy. The occurrence of any of these events would have a material adverse effect on our business.
+ 
+
+ The networks and/or businesses of our operating subsidiaries and joint venture partners are subject to extensive regulation that could limit or restrict their respective activities. If our operating subsidiaries or joint venture partners fail to comply with certain regulations, they may be subject to penalties, including fines and suspensions, which may adversely affect our business.
+ 
+
+ The acquisition, lease, maintenance and use of WBA licenses or other permits or authorizations of each of our subsidiaries and joint venture partners are extensively regulated in their respective markets. Regulations promulgated by applicable regulatory agencies are subject to change over time. In addition, a number of other laws and regulations apply to the businesses of our operating subsidiaries and joint venture partners. These laws and regulations and their application to our projects are subject to continual change, as new legislation, regulations or amendments to existing regulations are adopted from time to time by governmental or regulatory authorities in these countries. Current regulations directly affect the breadth of the services or products our operating subsidiaries and joint venture partners are able to offer and may affect the rates, terms and conditions of services and products they can provide to the public for a fee. Regulation of companies that offer competing services, such as cable and DSL providers and incumbent telecommunications carriers, also affects the businesses of our operating subsidiaries and joint venture partners indirectly.
+ 
+
+ In addition, the regulatory authorities in any of the countries where we operate may in the future restrict the ability to manage subscribers use of their respective networks or customers of their respective businesses, thereby limiting the ability to prevent or manage excessive bandwidth demands on our networks. Conversely, regulators in any given country may limit the bandwidth or the amount of fiber (as the case may be) to be used by subscribers applications, in part by restricting the types of 
+ 
+
+ 19
+ 
+
+ applications that may be used over these networks. If applicable regulatory authorities were to adopt regulations that constrain the ability to employ bandwidth or fiber management practices, excessive use of bandwidth-intensive applications would likely reduce the quality of their services for all subscribers. A decline in the quality of the services provided could result in loss of customers or litigation from dissatisfied subscribers and/or customers. Any of these developments could have a material adverse effect on our business.
+ 
+ The breach of a license or applicable law, even if inadvertent, could result in the revocation, suspension, cancellation or reduction in the term of a license or the imposition of fines. In addition, applicable regulatory authorities may grant new licenses to third parties, resulting in greater competition in territories where our subsidiaries and joint venture partners already have rights to licensed WBA spectrum, use of fiber or product offerings in connection with a WBA network. In order to promote competition, licenses may also require that third parties be granted access to the bandwidth, frequency capacity, facilities or services offered by our operating subsidiaries and joint venture partners. As a result, these entities may not be able to obtain or retain any required license and they may not be able to renew their licenses on favorable terms or at all.
+ 
+ In addition, our operating subsidiaries may engage in business activities that regulators consider to be outside the authorized scope of their business licenses or permitted activities. For companies that exceed the scope of their business licenses or permitted activities, or are operated without licenses or needed approvals in the past, but are now compliant, as well as for any companies that may currently operate without the appropriate licenses, renewals or approvals or outside the scope of their business licenses or permitted activities, the applicable regulatory authorities may have the authority to impose fines or other penalties. These fines or penalties can be sometimes as much as five to ten times the amount of the illegal revenues and may require the disgorgement of profits or revocation of the business licenses or approvals of the offending company. Fines, penalties, disgorgement of profits or revocations of their respective licenses or approvals might have a material adverse effect on our business.
+ 
+
+ Our operating subsidiaries and joint venture partners have committed to deploy WBA networks using WBA technologies, even if there are alternative technologies available in the future that would be technologically superior or more cost effective.
+ 
+ Our operating subsidiaries and joint venture partners intend to deploy WBA networks. Sino Crossings intends to install the required equipment to enable the fiber it owns in China to become operable and commercialized. VN Tech intends to sell, install and service fuel cells utilized in WBA networks. Zapna intends to distribute products and services associated with voice long distance charges voice and data roaming charges. We cannot assure that commercial quantities of WBA equipment that meets their respective requirements will become available on the schedule we expect, or at all, or that vendors will continue to develop, produce or service WBA equipment. Other competing 
+ 
+
+ 20
+ 
+
+ technologies which allow higher data transfer speeds and capacity may be developed that have advantages over WBA technology. Operators of other networks based on those competing technologies may be able to deploy their networks at a lower cost and more quickly than the cost and speed with which our operating subsidiaries and joint venture partners deploy their respective networks and/or businesses, which may allow those operators to compete more effectively. Additionally, if other network operators do not continue to adopt and deploy similar WBA technology, equipment manufacturers may be unwilling to invest the time, money and resources necessary to develop further infrastructure equipment and end user devices that meet our business needs. 
+ 
+ Additionally, WBA technology may not perform as we expect. Accordingly, our operating subsidiaries and joint venture partners may not be able to deliver the quality or types of services or products they expect, or may discover unanticipated costs associated with deploying and maintaining their respective WBA networks and/or businesses or deliver services and products they must offer in order to remain competitive. These risks could reduce subscriber growth and have a material adverse effect on our business.
+ 
+ If third parties fail to develop and deliver the equipment that our operating subsidiaries and joint venture partners need for their existing and future networks and/or businesses, we may be unable to execute our business strategy or operate our business.
+ 
+ The Company currently depends on third parties to develop and deliver complex systems, software and hardware products and components for WBA networks being deployed by our operating subsidiaries and joint venture partners in a timely manner, at a high level of quality. To successfully execute our business strategy, we must not only continue to have third parties produce the software and hardware components we require, and deliver them timely when needed, but we must also continue to further upgrade and evolve the technology for our businesses to remain competitive. Any failure by our third party vendors to meet these needs may impair our ability to execute our business strategy.
+ 
+ For our planned WBA deployment, we are relying on third parties to develop the network components and subscriber equipment necessary to build and operate the networks and/or businesses and other similar networks and businesses throughout the world. As WBA technology is a new and highly sophisticated technology, we cannot be certain that these third parties will be successful in their development efforts. The development process for WBA network components and subscriber equipment has been lengthy, has been subject to some short-term delays and may still encounter more significant delays. If these third parties are unable or unwilling to develop WBA technology components and subscriber equipment on a timely basis that perform according to our expectations, we may be unable to deploy the networks when we expect, or at all. If we are unable to deploy these networks and/or businesses in a timely manner, we may be unable to execute our business strategy.
+ 
+ 21
+ 
+
+ Many of the competitors of our operating subsidiaries and joint venture partners are 
+ better established and have significantly greater resources than we have, which may make it difficult to attract and retain subscribers and customers.
+ 
+
+ WBA services, including voice, data and video, in the markets where our projects operate are highly competitive. Our operating subsidiaries and joint venture partners compete with several other major WBA service and product providers and telecommunications companies. Many of these competitors are well established with larger and better developed WBA and telecommunications networks and support systems, longer-standing relationships with customers and suppliers, greater name recognition and greater financial, technical and marketing resources than do our operating subsidiaries and joint venture partners. Their competitors may reduce the prices of their services and products significantly or may offer WBA connectivity packaged with their other products or services. Our operating subsidiaries and joint venture partners may not be able to reduce their prices or otherwise combine their services with other products or services to remain competitive with these offerings, which may make it more difficult to attract and retain subscribers, all of which could have an adverse effect on our business.
+ 
+ We expect existing and prospective competitors to adopt technologies or business plans similar to the business plans for our operating subsidiaries and joint venture partners, or seek other means to develop services competitive with these companies, particularly if their services prove to be attractive in their respective target markets. There can be no assurances that there will be sufficient customer demand for services offered over the various networks we are deploying in the same markets to allow multiple operators, if any, to succeed.
+ 
+
+ We may experience difficulties in constructing, upgrading and maintaining the networks or businesses of our projects, which could adversely affect the satisfaction of their subscribers and customers and reduce our revenues.
+ 
+ Our business success depends on developing and providing services and products that give their subscribers and customers a high quality experience. Significant resources in constructing, maintaining, improving and operating the networks and/or businesses will be spent. Additionally, as the number of subscribers and customers using their networks and purchasing their products increase, as the usage habits of their subscribers and customers change. As other network operators increase their service and product offerings, our operating subsidiaries and joint venture partners may need to upgrade their networks and products to maintain or improve the quality of the services and products they provide to their subscribers and customers. If they do not successfully maintain or implement upgrades to their networks and product offerings, the quality of the services and products provided to their subscribers and customers may decline.
+ 
+ We may experience quality deficiencies, cost overruns and delays with our construction, maintenance and upgrade projects, including the portions of our networks not within our control. The construction of the require permits and approvals from 
+ 22
+ 
+
+ numerous governmental agencies. Such agencies often limit the expansion of transmission towers and other construction necessary for the successful deployment of WBA networks and related businesses we are deploying. Failure to receive approvals in a timely fashion can delay new market deployments and upgrades in existing markets and raise the cost of completing construction projects. In addition our operating subsidiaries and joint venture partners typically will be required to obtain rights from land, building and tower owners to install the antennas and other equipment that provide their services and products to their subscribers and customers. They may not be able to obtain, on terms acceptable to them or at all, the rights necessary to construct the networks and businesses we are deploying and expanding.
+ 
+
+ We may face challenges in managing and operating the networks and businesses we are deploying. These challenges include ensuring the availability of subscriber or customer equipment that is compatible with the networks being deployed and managing sales, advertising, customer support and billing and collection functions of the businesses, while providing reliable network services that meet subscribers or customers expectations. Our failure to meet subscriber or customer needs in any of these areas could adversely affect customer satisfaction, increase costs, decrease revenues and otherwise have a material adverse effect on our business and prospects for future business.
+ 
+
+ If our operating subsidiaries and joint venture partners do not maintain rights to use licensed spectrum in their respective markets, they may be unable to operate in these markets, which could adversely affect our ability to execute our business strategies. 
+ 
+
+ To offer WBA and related services and products, our operating subsidiaries and joint venture partners depend on their ability to acquire and maintain sufficient rights to use WBA spectrum through ownership or long-term leases in each of the markets in which we operate or intend to operate. Obtaining the necessary amount of licensed WBA spectrum in these markets can be a long and difficult process that can be costly and require a disproportionate amount of the resources of our operating subsidiaries and joint venture partners. Each company may not be able to acquire, lease or maintain the WBA spectrum necessary to execute their respective business strategies. In addition, it may be necessary to spend significant resources to acquire WBA spectrum in additional or existing markets, even if the amount of WBA spectrum actually acquired in certain markets is not adequate to deploy the networks on a commercial basis in all such markets.
+ 
+
+ Using licensed WBA spectrum, whether owned or leased, poses additional risks to our operating subsidiaries and joint venture partners, including, but not limited to, the following:
+ 
+ (i)
+ inability to satisfy build-out or service deployment requirements upon which some of the WBA spectrum licenses or leases are, or may be, conditioned;
+ (ii)
+ adverse changes to regulations governing the WBA spectrum rights;
+ 
+
+ 23
+ 
+
+ (iii)
+ inability to use a portion of the WBA spectrum each company has acquired or leased due to interference from licensed or unlicensed operators in each licensed WBA area or in adjacent WBA areas;
+ (iv)
+ refusal by the applicable licensing authorities to recognize each company s acquisition or lease of WBA spectrum licenses from others or investments in other license holders;
+ (v)
+ inability of our operating subsidiaries and joint venture partners to offer new services or to expand existing services to take advantage of new capabilities of their respective networks resulting from advancements in technology due to regulations governing each company s WBA spectrum rights;
+ (vi)
+ inability to control leased WBA spectrum, due to contractual disputes with, or the bankruptcy or other reorganization of, the license holders or third parties;
+ (vii)
+ failure of applicable regulators to renew the WBA licenses of our operating subsidiaries and joint venture partners as they expire and their failure to obtain extensions or renewals of such spectrum leases before they expire;
+ (viii)
+ failure to obtain extensions or renewals of WBA spectrum leases on acceptable terms, or an inability to renegotiate such leases on terms acceptable to us and before they expire;
+ (ix)
+ potentially significant increases in WBA spectrum prices, because of increased competition for the limited supply of licensed WBA spectrum in the countries where we operate; and
+ (x)
+ invalidation of authorization to use all or a significant portion of the WBA spectrum licensed to our operating subsidiaries and joint venture partners, resulting in, among other things, impairment charges related to assets recorded for such spectrum. 
+ 
+
+ In addition, other companies hold WBA spectrum rights that could be made available for lease or sale in the countries where we operate. The availability of additional WBA spectrum in the marketplace could change the market value of WBA spectrum rights generally and, as a result, may adversely affect the value of the WBA spectrum assets utilized by our operating subsidiaries and joint venture partners. The availability of additional fiber in China or better fuel cells could also change the market value of fiber and fuel cells generally and, as a result, may adversely affect the value of the fiber owned by Sino Crossings and the fuel cells produced by VN Tech, both of which may be used by our WBA networks.
+ 
+ 24
+ 
+
+ Interruption or failure of information technology and communications systems of our operating subsidiaries and joint venture partners could impair their ability to generate revenue or pay for our services and products.
+ 
+
+ Our operating subsidiaries and joint venture partners may experience service interruptions or system failures in the future. Any service interruption that adversely affects their ability to operate their businesses could result in an immediate loss of revenues to us and them. If they experience frequent or persistent system or network failures, their respective reputations and brands could be permanently harmed. We may make significant capital expenditures in an effort to increase the reliability of their systems, but these capital expenditures may not achieve the results we expect.
+ 
+ The services and products provided to subscribers or customers of our operating subsidiaries and joint venture partners depend on the continuing operation of their respective information technology and telecommunications systems, some of which are not within their control. Any damage to or failure of these systems could result in interruptions in the services they provide to their subscribers. Interruptions in their services could reduce their and our revenues and profits, and their respective brands could be damaged if people believe their networks are unreliable. The systems of our operating subsidiaries and joint venture partners are vulnerable to damage or interruption from earthquakes, terrorist attacks, floods, fires, power loss, telecommunications failures, computer viruses, computer denial of service attacks or other attempts to harm such systems and similar events. Their systems are not fully redundant and their disaster recovery planning may not be adequate. The occurrence of a natural disaster or unanticipated problems at their network centers could result in lengthy interruptions in service and adversely affect operating results.
+ 
+
+ Our operating subsidiaries and joint venture partners could be subject to claims that they have infringed on the proprietary rights of others, which claims would likely be costly to defend, could require them to pay damages and could limit their ability to use necessary technologies in the future.
+ 
+ Competitors or other persons may have independently developed or patented technologies or processes that are substantially equivalent or superior to the technologies or processes utilized by the networks and/or businesses of our operating subsidiaries and joint venture partners, or that are necessary to permit them to deploy and operate their networks and/or businesses based on WBA technology, or to offer additional services, such as VoIP. Competitors may develop or patent such technologies or processes in the future that could adversely affect our operations and/or businesses. These persons may claim that the services and products of our operating subsidiaries and joint venture partners infringe on these patents or other proprietary rights. For instance, certain third parties claim that they hold patents relating to certain aspects of WBA services and VoIP technology. These third parties may seek to enforce these patent rights against the operators of network providers utilizing such technologies. 
+ 
+
+ 25
+ 
+
+ Defending against infringement claims, even meritless ones, would be time consuming, distracting and costly. If any of these companies are found to be infringing the proprietary rights of a third party, it could be enjoined from using such third party s rights, may be required to pay substantial royalties and damages and may no longer be able to use the intellectual property subject to such rights on acceptable terms or at all. Failure to obtain licenses to intellectual property held by third parties on reasonable terms, or at all, could delay or prevent the development or deployment of the services and businesses of our operating subsidiaries and joint venture partners and could require us and them to expend significant resources to develop or acquire non-infringing intellectual property.
+ 
+
+ If data security measures are breached, the subscribers of our operating subsidiaries and joint venture partners may perceive their networks as not secure.
+ 
+ The network security of our operating subsidiaries and joint venture partners, and the authentication of their subscriber credentials, is designed to protect unauthorized access to data on their networks. Because techniques used to obtain unauthorized access to, or to sabotage, networks change frequently and may not be recognized until launched against a target. Our operating subsidiaries and joint venture partners may be unable to anticipate or implement adequate preventive measures against unauthorized access or sabotage. Consequently, unauthorized parties may overcome the security of their networks and obtain access to data on their networks, including on a device connected to their networks. In addition, unauthorized access or sabotage of their networks could result in damage to their networks and to the computers or other devices used by their subscribers. An actual or perceived breach of network security, regardless of who is ultimately held responsible, could harm public perception of the effectiveness of their security measures, adversely affect their ability to attract and retain subscribers, expose them to significant liability and adversely affect their business prospects.
+ 
+
+ Unexpected network interruption caused by system failures may reduce user base and harm our operating subsidiaries reputation.
+ 
+ Reliable access, consistent speeds while connecting to internet and the performance and reliability of the networks of our operating subsidiaries and joint venture partners are critical to their and their ability to attract and retain users of their internet services. Any system failure or performance inadequacy that causes interruptions or delays in the availability of our operating subsidiaries services, or increases the response time of their services, could reduce user satisfaction and traffic, which would reduce the internet service appeal to users of high speed internet access. As the number of users and traffic increase, our operating subsidiaries cannot ensure that they will be able to scale their systems proportionately. In addition, any system failures and electrical outages could materially and adversely impact their businesses.
+ 
+ 26
+ The businesses of our operating subsidiaries and joint venture partners will depend upon a strong brand, and if they do not maintain and enhance their brands, their ability to attract and retain subscribers may be impaired.
+ 
+ We believe that the brands of our operating subsidiaries and joint venture partners are a critical part of their businesses. Maintaining and enhancing their brands may require them to make substantial investments, with no assurance that these investments will be successful. If they fail to promote and maintain their brands, or incur significant expenses to promote their brands and yet are unsuccessful in maintaining a strong brand, their businesses and prospects may be adversely affected. We anticipate that maintaining and enhancing their brands will become increasingly important, difficult and expensive.
+ 
+ Our contractual arrangements with our operating subsidiaries and joint venture partners not be as effective in providing operational control that our ownership interests in such businesses was designed to have and may be difficult to enforce.
+ 
+
+ The government of China has restricted or limited foreign ownership of certain kinds of assets and companies operating in certain industries in the PRC. The industry groups that are restricted are wide ranging, including certain aspects of telecommunications, such as the internet, advertising, food production and heavy equipment manufacturers. In addition, there can be restrictions on the foreign ownership of businesses that are determined from time to time to be in important industries that may affect the national economic security in China, or having famous brand names or well-established brand names. Subject to the review requirements of the MIIT and other regulatory agencies in China for acquisitions of assets and companies in China, and subject to the various percentage ownership limitations that exist from time to time, acquisitions involving foreign investors and parties in the various restricted categories of assets and industries may nonetheless sometimes be consummated using contractual arrangements with permitted Chinese parties, such as NGSN, Aerostrong, VN Tech and Sino Crossings. The agreements are designed to provide us with the economic benefits of and control over the subject assets or equity interests similar to the rights of full ownership. However, since there has been limited implementation guidance provided with respect to the merger and acquisition regulations by China, there can be no assurance that the relevant government agency would not apply them to our contractual arrangements with NGSN, Aerostrong, VN Tech and Sino Crossings. If such an agency determines that such an application should have been made, consequences may include levying fines, revoking business and other licenses, such as for WBA services, requiring restructure of ownership or operations and requiring discontinuation of any portion of all of the acquired businesses. Our businesses and control arrangements NGSN, Aerostrong, VN Tech and Sino Crossings that are set forth in our agreements with them may not be followed by them and may not be held enforceable by a court of law or in an arbitration proceeding. In essence, we may have difficulty enforcing our NGSN, Aerostrong, VN Tech and Sino Crossings ownership and control rights. Therefore, our agreements with 
+ 
+
+ 27
+ 
+
+ NGSN, Aerostrong, VN Tech and Sino Crossings may not be as effective in providing us with the same economic benefits, accounting consolidation or control over a target business as would direct ownership.
+ 
+ In addition, if any of our operating subsidiaries and joint venture partners fail to perform their obligations under our agreements with them, we may have to incur substantial costs and expend substantial resources to enforce such agreements and rely on legal remedies under the laws of of the countries in which our operating subsidiaries and joint venture partners operate, including seeking specific performance or injunctive relief and claiming damages, which we cannot assure will be sufficient to off-set the cost of enforcement and may adversely affect the benefits we expect to receive from the acquisition of our interest in our agreements with our operating subsidiaries and joint venture partners. In the event we are unable to enforce these agreements, we may not be able to exert the effective level of control or receive the full economic benefits of full direct ownership over our target businesses.
+ 
+
+ The contractual arrangements we enter into with our operating subsidiaries and joint venture partners may be subject to a high level of scrutiny by the tax authorities in the countries in which those companies operate.
+ 
+
+ Under the laws of the countries in which our operating subsidiaries and joint venture partners operate, arrangements and transactions among related parties may be subject to audit or challenge by the tax authorities in these countries. If any of the transactions we enter into with our operating subsidiaries and joint venture partners are found not to be on an arm s-length basis, or to result in an unreasonable reduction in tax under the laws of these countries, the tax authorities have the authority to disallow any tax savings, adjust the profits and losses of us and/or our operating subsidiaries and joint venture partners, and assess late payment interest and penalties. A finding by the tax authorities in these countries that we and/or our operating subsidiaries and joint venture partners are ineligible for any such tax savings, or that we are not eligible for tax exemptions, would substantially increase our possible future taxes to be paid in these countries.
+ 
+ You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in countries where our projects and their assets are located based on U.S. judgments against us and each of our and their respective subsidiaries, executive officers, directors, shareholders and others.
+ 
+ Substantially all our asset and personnel are located outside of the United States. In addition, many of the joint ventures and subsidiaries through which each project is operated have additional intermediate holding or subsidiary companies in the Cayman Islands, Seychelles, Cyprus, Hong Kong or other jurisdictions. As a result, it may not be possible for investors in the United States to effect service of process within the United States or elsewhere outside the particular country where an asset, operating 
+ 
+
+ 28
+ 
+
+ subsidiary, or pertinent representative is located in order to secure jurisdiction over our operating subsidiaries and joint venture partners or their respective, officers, directors and shareholders and others, including with respect to matters arising under United States federal or state securities laws. Countries where our projects operate or their assets are located may not have treaties providing for reciprocal recognition and enforcement of judgments of courts with the United States or many other countries. As a result, recognition and enforcement in those countries of these judgments in relation to any matter, including United States securities laws, may be difficult or impossible. Furthermore, the right to assert an original action in against our assets, subsidiaries, officers, directors, shareholders and advisors may be subject to restrictions under the laws of those countries. 
+ 
+
+ Any revenues from our investment in our operating subsidiaries and joint venture partners will be denominated in foreign currency and subject to currency fluctuations.
+ 
+ The change in value of the foreign currency against the U.S. dollar, Euro and other currencies is affected by, among other things, changes in the political and economic conditions in the countries in which our operating subsidiaries and joint venture partners operate. Any significant revaluation of the currencies may have a material adverse effect on our revenues and financial condition. For example, to the extent that we need to convert U.S. dollars we receive into Nuevo Soles for operations in Peru, appreciation of the Nuevo Soles against the U.S. dollar would reduce the Nuevo Soles amount we receive from the conversion. Conversely, if we decide to convert Nuevo Soles into U.S. dollars, appreciation of the U.S. dollar against the Nuevo Soles would reduce the U.S. dollar amount available to us. Fluctuation in exchange rates between foreign currencies and the U.S. dollar would also have a significant effect upon our reported results, since our reporting currency is the U.S. dollar.
+ 
+
+ There is a risk that the Company may not be able to meet its financial obligations under agreements with our operating subsidiaries and joint venture partners, resulting in a loss of the business opportunity represented by these acquisitions and joint ventures.
+ 
+
+ Any material default by the Company in connection with its obligations under each of the agreements with our operating subsidiaries and joint venture partners may be a basis to forfeit or lose our equity or for a joint venture partner to terminate our joint venture agreement. Termination of any of these relationships could have a materially adverse effect on our business.
+ 
+
+ 29
+ 
+
+ 
+
+ Heightened enforcement of the environmental laws and regulations of the countries in which our operating subsidiaries and joint venture partners operate may result in higher costs of compliance with these laws and regulations and costs of raw materials.
+ 
+ The businesses of our operating subsidiaries and joint venture partners and their 
+ properties are subject to the environmental laws and regulations of the countries in which our operating subsidiaries and joint venture partners operate relating to the protection of the environment, natural resources and worker health and safety and controlling the use, management, storage, and disposal of hazardous substances, wastes and other regulated materials. Because our operating subsidiaries and joint venture partners lease, own and/or operate real property, various environmental laws also may impose liability on them for the costs of cleaning up and responding to hazardous substances that may have been released on the properties they utilize, including releases unknown to any of them. These environmental laws and regulations also could require us or these companies to pay for excessive discharge fees and take remedial actions. The costs of complying with these various environmental requirements, as they now exist or may be altered in the future, could adversely affect our business.
+ 
+
+ In addition, our raw material costs and costs of goods have been rising, and may continue to rise, due to suppliers being subject to increasing enforcement of these environmental laws and regulations. This could also adversely affect our profitability by increasing the cost of our operating subsidiaries and joint venture partners to comply with these laws.
+ 
+
+ Risk Factors Related To Doing Business in China
+ 
+
+ If the Chinese government finds that our agreements do not comply with Chinese governmental restrictions on foreign investment, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to significant penalties or be forced to relinquish our interests in their operations.
+ 
+
+ As stated above, China laws and regulations currently prohibit or restrict foreign ownership in certain important industries, including telecommunications, advertising, food production and heavy equipment. There are uncertainties under China laws and regulations whether obtaining a majority interest through contractual arrangements will comply with regulations prohibiting or restricting foreign ownership in certain industries. For example, China may apply restrictions in other industries in the future. In addition, there can be restrictions on the foreign ownership of businesses that are determined from time to time to be in important industries that may affect the national economic security or those in China having famous Chinese brand names or well established Chinese brand names.
+ 
+ 30
+ 
+
+ 
+
+ If we or any of our potential future subsidiaries or affiliated entities are found to be in violation of any existing or future Chinese laws or regulations, for example, if we are deemed to be holding equity interests in certain of our affiliated entities in which direct foreign ownership is prohibited, the relevant Chinese regulatory authorities might have the discretion to, among other things, do the following:
+ (i)
+ revoke the business and operating licenses of NGSN, Aerostrong, VN Tech; and Sino Crossings;
+ (ii)
+ confiscate relevant income and impose fines and other penalties;
+ (iii)
+ discontinue or restrict existing or possible future operations in China by NGSN, Aerostrong, VN Tech and Sino Crossings;
+ (iv)
+ require us and/or NGSN, Aerostrong, VN Tech Sino Crossings to restructure the relevant ownership structure or operations; and
+ (v)
+ impose conditions or requirements with which we or NGSN, Aerostrong, VN Tech and Sino Crossings may not be able to comply.
+ 
+
+ The imposition of any of these penalties could result in a material and adverse effect on our ability to conduct business in China. In addition, the relevant PRC regulatory authorities may impose further penalties. Any of these consequences could have a material and adverse effect on our business.
+ 
+ In many cases, existing regulations with regard to investments from foreign investors and domestic private capital lack detailed explanations and operational procedures, and are subject to fluctuating interpretations, which have changed over time. We thus cannot be certain how the regulations will be applied to our businesses, either currently or in the future. Moreover, new regulations may be adopted or the interpretation of existing regulations may change, any of which could result in similar penalties resulting in a material and adverse effect on our ability to conduct our business.
+ 
+
+ The operations and facilities of NGSN, Aerostrong, VN Tech and Sino Crossings in China are subject to extensive regulation, which may subject them to high compliance costs and expose them to penalties for non-compliance. In addition, they may not be able to obtain required regulatory approvals for their products and services in a cost-effective manner or at all, which could prevent them from successfully developing and marketing their products and services.
+ 
+
+ Providing and marketing the products and services of NGSN, Aerostrong, VN Tech and Sino Crossings are subject to extensive regulation and review by governmental authorities in China. The Chinese laws and regulations applicable to WBA services are wide-ranging and govern, among other things, every aspect of such services. Any failure to obtain regulatory approvals or clearances or to renew licenses for its products and services could prevent NGSN, Aerostrong, VN Tech and Sino Crossing from successfully marketing their products and services and result in a material and adverse effect on our ability to conduct our businesses in China.
+ 
+
+ 31
+ 
+
+ The Company, NGSN, Aerostrong, VN Tech and Sino Crossings could be subject to civil liabilities, if we and they fail to comply with applicable laws and regulatory requirements.
+ 
+
+ Because the Company, NGSN, Aerostrong, VN Tech and Sino Crossings are subject to extensive regulations in China, we and they are subject to the risk that regulations could change in a way that would expose us and them to additional costs, penalties or liabilities. If additional regulatory requirements are implemented in China, the cost of developing or selling their services and/or products may increase, as may the costs to us of fulfilling our obligations under the agreements with NGSN, Aerostrong, VN Tech and Sino Crossings.
+ 
+
+ Adverse changes in political and economic policies of the governments in China could have a material adverse effect on the overall economic growth of China, which could reduce the demand for the products and services offered by NGSN VN Tech, Aerostrong, and Sino Crossings and adversely affect their competitive positions in the marketplace and adversely affect our businesses in China.
+ 
+
+ All of the businesses of NGSN, VN Tech and Sino Crossings are conducted in China. A substantial amount of sale of devices relating to WBA services are in China. All of our sales of fiber use will be made in China. Accordingly, both our and their businesses, financial condition, results of operations and prospects will be affected significantly by economic, political and legal developments in China. However, the Chinese economy differs from the economies of most developed countries in many respects, including, but not limited to, the following:
+ 
+ (i)
+ the amount of government involvement;
+ (ii)
+ the level of development;
+ (iii)
+ the growth rate;
+ (iv)
+ the control of foreign exchange; and
+ (v)
+ the allocation of resources.
+ 
+
+ While China s economy has experienced significant growth in the past 30 years, growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall economy of China, but may also have a negative effect on NGSN, Aerostrong, VN Tech and Sino Crossings, and therefore on us. For example, our growth and expenses may be adversely affected by government control over the distribution of WBA services in China.
+ 
+
+ 
+
+ 32
+ 
+
+ The economy in China has been transitioning from a planned economy to a more market-oriented economy. Although in recent years the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, the Chinese government still owns a substantial portion of the productive assets in China. The continued control of these assets and other aspects of the national economy by the Chinese government could adversely affect our business and the businesses of NGSN, Aerostrong, VN Tech and Sino Crossings. The Chinese government also exercises significant control over economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policies and providing preferential treatment to particular industries or companies. 
+ 
+
+ Any adverse change in the economic conditions or government policies in China could have a material adverse effect on overall economic growth and the level of internet connectivity spending in China, which in turn could lead to a reduction in demand for the products and services provided by NGSN, Aerostrong, VN Tech and Sino Crossings and adversely affect our business operations.
+ 
+
+ The Chinese government could change its policies toward, or even nationalize, private enterprises, which could reduce or eliminate the interests held in our company located in China.
+ 
+
+ Over the past several years, the Chinese government has pursued economic reform policies, including the encouragement of private economic activities and decentralization of economic regulation. The Chinese government may not continue to pursue these policies or may significantly alter them to our detriment from time to time and without notice. Changes in policies by the Chinese government that result in a change of laws, regulations, their interpretation, or the imposition of high levels of taxation, restrictions on currency conversion or imports and sources of supply could materially and adversely affect our business and operating results. The nationalization or other expropriation of private enterprises by the Chinese government could result in the total loss of our investment in China.
+ 
+ As a result of merger and acquisition regulations relating to acquisitions of assets and equity interests of Chinese companies by foreign entities, we expect that acquisitions will take longer and be subject to economic scrutiny by the Chinese government authorities such that we may not be able to complete a transaction, negotiate a transaction that is acceptable to our shareholders, or sufficiently protect shareholder s interests in a transaction. 
+ 
+
+ On August 8, 2006, six Chinese regulatory agencies, namely, the Ministry of Commerce, the State Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, the 
+ 
+
+ 33
+ 
+
+ China Securities Regulatory Committee, and the Chinese State Administration of Foreign Exchange, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, which became effective on September 8, 2006. These comprehensive rules govern the approval process by which a Chinese company may participate in an acquisition of its assets or its equity interests and by which a Chinese company may obtain public trading of its securities on a securities exchange outside China.
+ 
+ Although prior to September 8, 2006 there was a complex series of regulations administered by a combination of provincial and centralized agencies in place for acquisition approval of Chinese enterprises by foreign investors, the merger and acquisition rules have largely centralized and expanded the approval process to MOFCOM, SAIC, SAFE or its branch offices, SASAC and the CSRC. The merger and acquisition rules establish, among other things, additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex, including requirements in some instances that the MOFCOM be notified in advance when a foreign investor acquires equity or assets of a Chinese domestic enterprise. Complying with the requirements of the merger and acquisition rules to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from the MOFCOM, may delay or inhibit our ability to complete such transactions. This could affect our ability to expand our businesses or maintain our market share in China.
+ 
+ Depending on the structure of the transaction, these regulations will require our Chinese partners to make a series of applications and supplemental applications to the aforementioned agencies, some of which must be made within strict time limits and require approvals from one or more of the aforementioned agencies. The application process has been supplemented to require the presentation of economic data concerning a transaction, introducing aspects of economic and substantive analysis of the target business and the acquirer, and the terms of the transaction by MOFCOM and other governing agencies, as well as an evaluation of compliance with legal requirements. The application process for approval now includes submissions of an appraisal report, an evaluation report and the acquisition agreement, depending on the structure of the transaction. An employee settlement plan for the target company is also to be included in the application.
+ 
+
+ The merger and acquisition rules also prohibit a transaction at an acquisition price obviously lower than the appraised value of the Chinese business or assets. The regulations require that, in certain transaction structures, the consideration must be paid within strict time periods, generally not in excess of a year. Because the Chinese authorities have been concerned with offshore transactions which converted domestic companies into foreign investment enterprises in order to take advantage of certain benefits, including reduced taxation in China, the merger and acquisition rules require new foreign sourced capital of not less than 25% of the domestic company s post-
+ 
+
+ 34
+ 
+
+ acquisition capital in order to obtain FIE treatment. Accordingly, if a sufficient amount of foreign capital is not infused into the domestic company, it will not be eligible to obtain FIE treatment. In the agreement reached by the foreign acquirer, target, creditors and other parties, there must be no harm to third parties and the public interest in the allocation of assets and liabilities being assumed or acquired. These aspects of the regulations will limit our ability to negotiate various terms of the acquisition, including aspects of the initial consideration, contingent consideration, holdback provisions, indemnification provisions and provisions relating to the assumption and allocation of assets and liabilities. Therefore, we may not be able to negotiate a transaction with terms that will satisfy our investors and protect our shareholders' interests in an acquisition of a Chinese business or its assets.
+ 
+
+ It is expected that compliance with the regulations will be more time consuming than in the past, will be more costly for our Chinese partners and will permit the government much more extensive evaluation and control over the terms of the transaction. Therefore, acquisitions in China may not be able to be completed, because the terms of the transaction may not satisfy aspects of the approval process and may not be completed, even if approved, if they are not consummated within the time permitted by the approvals granted.
+ 
+
+ Since assets and operating subsidiaries are located in China, any distribution of dividends or proceeds from liquidation are subject to the approval of the relevant PRC government agencies. We are not likely to declare dividends in the near future.
+ 
+
+ Because a substantial portion of our assets are located inside China, we will be subject to the laws and regulations of China in determining dividends. Under the laws governing foreign invested enterprises in China, dividend distribution and liquidation are allowed but subject to special procedures under the relevant laws and rules. Under current Chinese tax regulations, dividends paid to are subject to a ten percent Chinese tax. In the future, tax authorities in China could amend or interpret the regulations in a manner that would materially and adversely affect our ability and that of our joint venture partners or subsidiaries to pay dividends and other distributions to us. There is also the possibility that other regulatory interpretations by Chinese authorities could prohibit NGSN, Aerostrong, VN Tech and Sino Crossings from recording revenues that could impact our consolidating their financial statements in order to comply with SEC reporting obligations.
+ 
+ In addition, Chinese legal restrictions permit payment of dividends only out of net income as determined in accordance with Chinese accounting standards and regulations. If NGSN, Aerostrong, VN Tech or Sino Crossings or any of their subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to NGSN, Aerostrong, VN Tech or Sino Crossings, which in turn would limit their ability to pay dividends on their common stock.
+ 
+ 35
+ The Chinese government may nationalize certain businesses or otherwise alter its policy with respect to foreign investment in China in a way that would prohibit or greatly hinder the Company s ability to do business in China.
+ 
+
+ While the Chinese government currently advocates foreign investment into China, socio-political changes, war or economic changes and shifts could result in a change in China s policy with respect to investment from non-Chinese businesses. The government agencies, for example, could prohibit ownership of businesses by foreigners or revoke WBA licenses, permits and authorizations granted by China or other regulatory authority that we are dependent on, or otherwise alter the Company s revenue sharing model. While we do not believe that the foregoing is likely in the near future, no assurance can be made that such events, all of which would adversely affect the Company, will not occur.
+ 
+ Uncertainties with respect to Chinese legal system could have a material adverse effect on our businesses in China and on the Company.
+ 
+
+ The Chinese legal system is a civil law system based on written statutes. Unlike in the common law system, prior court decisions may be cited for reference, but have limited precedential value. Since 1979, China s legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. We are subject to laws and regulations applicable to foreign investment in China and, in particular, laws applicable to wholly foreign-owned enterprises. However, since these laws and regulations are relatively new and Chinese legal system continues to evolve rapidly, the interpretations of many laws, regulations and rules are not always uniform. Enforcement of these laws, regulations and rules involve uncertainties that may limit legal protections available to us. For example, we may have to resort to administrative and court proceedings to enforce the legal protection that we enjoy either by law or contract. However, since the Chinese administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings, and the level of legal protection we enjoy than in more developed legal systems. 
+ 
+
+ These uncertainties may impede our ability to enforce our agreements and any other contracts that we may enter into in order to successfully deploy and operate the NGSN, Aerostrong VN Tech Sino Crossings networks and/or businesses. Furthermore, intellectual property rights and confidentiality protections in China are not as effective as in the United States or other countries. Accordingly, we cannot predict the effect of future developments in Chinese legal system, particularly with regard to the internet, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement of these laws, or the preemption of local regulations by national laws. These uncertainties could limit the legal protections available to us and other foreign investors, including you. In addition, any litigation in China may be protracted and result in substantial costs and diversion of our resources and management attention.
+ 
+ 36
+ Any revenues from our investment in NGSN, Aerostrong, VN Tech and Sino Crossings will be denominated in RMB and subject to currency fluctuations and currency exchange controls. 
+ 
+ The change in value of the RMB against the U.S. dollar, Euro and other currencies is affected by, among other things, changes in China s political and economic conditions. The RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. International pressure on the Chinese government could result in a more significant fluctuation of the RMB against the U.S. dollar. Any significant revaluation of the RMB may have a material adverse effect on our revenues and financial condition. For example, to the extent that we need to convert U.S. dollars we receive into RMB for operations in China, appreciation of the RMB against the U.S. dollar would reduce the RMB amount we receive from the conversion. Conversely, if we decide to convert RMB into U.S. dollars, appreciation of the U.S. dollar against the RMB would reduce the U.S. dollar amount available to us. Fluctuation in exchange rates between RMB and the U.S. dollar would also have a significant effect upon our reported results, since our reporting currency is the U.S. dollar. In addition, since China imposes controls over foreign currency exchange, we may encounter difficulty when remitting the revenues generated from our investment in NGSN, Aerostrong, VN Tech and Sino Crossings, for various reasons such as the failure in obtaining appropriate filling or approval and the change of foreign exchange policy. 
+ 
+ Regulations relating to offshore investment activities by Chinese residents may limit our ability to pay dividends to us and our ability to increase our investment in NGSN, Aerostrong, VN Tech and Sino Crossings. 
+ 
+ In October 2005, SAFE issued a circular entitled Circular on several issues concerning foreign exchange regulation of corporate finance and round-trip investments by PRC residents through special purpose companies incorporated overseas, or Circular No. 75. Circular No. 75 states that if residents of China use assets or equity interests in their Chinese entities as capital contributions to establish offshore companies or inject assets or equity interests of their Chinese entities into offshore companies to raise capital overseas, they must register with local SAFE branches with respect to their overseas investments in offshore companies and must also file amendments to their registrations if their offshore companies experience material events involving capital variation, such as changes in share capital, share transfers, mergers and acquisitions, spin-off transactions, long-term equity or debt investments or uses of assets in China to guarantee offshore obligations. In May 2008, SAFE issued relevant guidance to its local branches with respect to the operational process for Circular No. 75, which standardized more specific and stringent supervision on the registration according to Circular No. 75. The new guidance requires any Chinese resident holding shares or options in a special purpose company to register with local SAFE and imposes obligations on onshore subsidiaries of the special purpose company to coordinate and use such registration. Failure of our 
+ 
+
+ 37
+ 
+
+ Chinese partners to comply with relevant requirements under Circular No. 75 could subject us to fines or sanctions that the PRC government imposes, including restrictions on our ability to pay dividends to us and our ability to increase our investment in NGSN, Aerostrong, VN Tech and Sino Crossings. 
+ 
+ Risk Factors Related To the Company s Stock
+ 
+
+ The Company s Series A common shares are currently listed on the OTC Link quotation platform of OTC Markets Group, Inc. The Company cannot predict the extent to which a trading market will develop or how liquid that market might become. Accordingly, holders of our Series A common shares may be required to retain their Series A common shares for an indefinite period of time.
+ 
+ The OTC Link quotation system provides significantly less liquidity than national stock exchanges. Quotes for stocks included on the OTC Link quotation system are not listed in the financial sections of newspapers, as are those for the national stock exchanges. Therefore, prices for securities traded solely on the OTC Link quotation system may be difficult to obtain, and holders of our Series A common shares may be unable to resell their securities at or near their original acquisition price or at any price. Market prices for our Series A common shares will be influenced by a number of factors, including, but not limited to:
+ 
+ (i)
+ the issuance of new equity securities pursuant to future offering;
+ (ii)
+ changes in interest rates;
+ (iii)
+ new services or significant contracts and acquisitions;
+ (iv)
+ variations in quarterly operating results;
+ (v)
+ change in financial estimates by securities analysts;
+ (vi) 
+ he depth and liquidity of the market for the Company s Series A common shares;
+ (vii)
+ investor perceptions of us and of investments based in the countries where our projects operate and the project companies generally; and
+ (viii)
+ general economic and other national and international conditions.
+ 
+
+ 38
+ 
+
+ The regulation of penny stocks by the SEC and FINRA may discourage the tradability and liquidity that will impair investors ability to sell our Series A common shares.
+ 
+ The Company s Series A common shares are a penny stock. The SEC imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than established customers or accredited investors. For purposes of the applicable SEC rule, the phrase accredited investors means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of $1,000,000 or having an annual income that exceeds $200,000, or that, when combined with a spouse s income, exceeds $300,000. For transactions covered by the rule, the broker-dealer must make a special suitability determination of the purchaser and receive the purchaser s written agreement to the transaction prior to the sale. Effectively, this discourages broker-dealers from executing trades in penny stocks. Consequently, the rule will affect the ability of our shareholders to sell their Series A common shares because it imposes additional regulatory burdens on penny stock transactions. 
+ 
+
+ In addition, the SEC has adopted a number of rules to regulate penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, and 15g-9 under the Securities and Exchange Act of 1934, as amended. Because the Company s Series A common shares constitute penny stocks within the meaning of the rules, the rules would apply to us and to our Series A common shares. The rules will further affect the ability of owners of shares to sell their shares of our Series A common shares in any market that might develop for them, because it imposes additional regulatory burdens on penny stock transactions.
+ 
+
+ Shareholders should be aware that, according to SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include: 
+ 
+
+ (i)
+ control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; 
+ (ii)
+ manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; 
+ (iii)
+ boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; 
+ (iv)
+ excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and 
+ (v)
+ the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, leaving investors with losses. 
+ 
+
+ 39
+ 
+
+ Our management is aware of these abuses that have occurred historically in the penny stock market. Although we are in no position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to its Series A common shares.
+ 
+ The Company has no plans to pay dividends in the foreseeable future, and investors may not expect a dividend as a return of or on any investment in the Company.
+ 
+
+ The Company has not paid dividends on its Series A common shares and does not anticipate paying such dividends in the foreseeable future.
+ 
+
+ Our investors may suffer future dilution due to issuances of shares for various considerations in the future.
+ 
+
+ There may be substantial dilution to the Company s shareholders as a result of future decisions of our Board of Directors to issue shares of our Series A common shares without shareholder approval for cash, services or acquisitions. The Company can give investors no assurance that they will be able to sell their shares of our Series A common shares at or near ask prices or at all if they need money or otherwise desire to liquidate their securities of the Company.
+ 
+
+ The price of the Company s Series A common shares is volatile, which substantially increases the risk that the investor may not be able to sell their securities at or above the price that the investors may pay for our Series A common shares.
+ 
+ Because of the price volatility the Company has observed since its inception, an investor in our Series A common shares may not be able to sell their Series A common shares when the investor desires to do so at a price he, she or it desires to attain. The inability to sell securities in a rapidly declining market may substantially increase the risk of loss because the price of our Series A common shares may suffer greater declines due to the price volatility of our Series A common shares. Certain factors, some of which are beyond our control, that may cause our Series A common share price to fluctuate significantly include, but are not limited to, the following:
+ 
+
+ (i)
+ variations in our quarterly operating results;
+ (ii)
+ loss of a key relationship or failure to complete significant transactions;
+ (iii) 
+ additions or departures of key personnel; and
+ (iv) 
+ fluctuations in stock market price and volume.
+ 
+
+ 40
+ 
+
+ In addition, in recent years the stock market in general, and the over-the-counter markets in particular, have experienced extreme price and volume fluctuations. In some cases, these fluctuations are unrelated or disproportionate to the operating performance of the underlying company. These market and industry factors may materially and adversely affect our Share price, regardless of our operating performance. In the past, class action litigation often has been brought against companies following periods of volatility in the market price of those companies common stock. If we become involved in this type of litigation in the future, it could result in substantial costs and diversion of management attention and resources, which could have a material adverse effect on the Company s Series A common shares.
+ 
+
+ 
+
+ FORWARD LOOKING STATEMENTS
+ 
+
+ The statements contained in this prospectus that are not historical fact are forward-looking statements which can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "should," or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. We have made the forward-looking statements with management s best estimates prepared in good faith. Because of the number and range of the assumptions underlying our projections and forward-looking statements, many of which are subject to significant uncertainties and contingencies that are beyond our reasonable control, some of the assumptions inevitably will not materialize. Unanticipated events and circumstances may occur subsequent to the date of this prospectus or the date of any updates to this prospectus, pursuant to applicable regulations, during our continuous offering.
+ 
+
+ These forward-looking statements are based on current expectations, and we will not update this information other than required by law. Therefore, the actual experience of the Company, and results achieved during the period covered by any particular projections and other forward-looking statements should not be regarded as a representation by the Company, or any other person, that we will realize these estimates and projections, and actual results may vary materially. We cannot assure you that any of these expectations will be realized or that any of the forward-looking statements contained herein will prove to be accurate.
+ 
+
+ 
+
+ USE OF PROCEEDS
+ 
+
+ We will not receive any proceeds from the sale of Series A common shares offered by Selling Stockholder. However, we will receive proceeds from the sale of our Series B preferred shares to Selling Stockholder pursuant to the stock purchase agreement. The proceeds from sale of the Series B preferred shares will be used for working capital and general corporate purposes.
+ 
+
+ 41
+ SELLING STOCKHOLDER
+ 
+
+ We are registering for resale 32,000,000 Series A common shares that are issued and outstanding and held by Selling Stockholder identified below. 
+ 
+
+ Selling Stockholder is neither a broker-dealer nor an affiliate of a broker-dealer. Selling Stockholder did not have any agreement or understanding, directly or indirectly, to distribute any of the shares being registered at the time of purchase.
+ 
+
+ Selling Stockholder may offer for sale all or part of the Series A common shares from time to time. The table below assumes that the Selling Stockholder will sell all of the Series A common shares offered for sale. Selling Stockholder is under no obligation, however, to sell any Series A common shares pursuant to this prospectus.
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Beneficial owner
+ Series A
+ common shares
+ beneficially
+ owned prior to
+ offering(1)
+ Series A
+ common shares
+ offered under this
+ prospectus(3)
+ Series A
+ common shares
+ beneficially
+ owned after
+ offering(4)
+ Percent
+ ownership
+ after
+ offering
+
+ Ironridge Technology Co.(2)
+ 0
+ 32,000,000
+ 0
+ 0
+
+ TOTAL
+ 0
+ 32,000,000
+ 0
+ 0
+
+ (1) Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, securities that are currently convertible or exercisable into our Series A common shares, or convertible or exercisable into our Series A common shares within 60 days of the date hereof are deemed outstanding. Such Series A common shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the following table, each stockholder named in the table has sole voting and investment power with respect to the shares set forth opposite such stockholder s name.
+ (2) Peter Cooper has voting and investment power over the securities owned by Selling Stockholder. For so long as Selling Stockholder holds any shares of Series A preferred shares or common stock, it is prohibited from, among other actions: (1) voting any shares of common stock owned or controlled by it, exercising any dissenter s rights, executing or soliciting any proxies or seeking to advise or influence any person with respect to any voting securities; (2) engaging or participating in any actions or plans that relate to or would result in, among other things: (a) acquiring additional securities, alone or together with any other person, which would result in it and its affiliates collectively beneficially owning or controlling, or being deemed to beneficially own or control, more than 9.99% of the total outstanding common stock or other voting securities; (b) an extraordinary corporate transaction such as a merger, reorganization or liquidation; (c) a sale or transfer of a material amount of assets; (d) changes in the present board of directors or management; (e) material changes in the capitalization or dividend policy; (f) any other material change in the issuer s business or corporate structure; (g) actions which may impede the acquisition of control by any person or entity (h) causing a class of securities to be delisted; (i) causing a class of equity securities to become eligible for termination of registration; or (3) any actions similar to the foregoing. 
+ (3) Represents shares issuable upon conversion of Series A Preferred Stock issued at the initial Closing, Second Closing and Third Closing under the Ironridge Purchase Agreement. 
+ (4) Represents shares issuable upon conversion of Series B preferred shares.
+ (5) Assumes all shares offered are sold. 
+ 42
+ 
+
+ PLAN OF DISTRIBUTION
+ 
+
+ Selling Stockholder of the common stock and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their Series A common shares on the OTC Link quotation platform of OTC Markets Group, Inc. or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. Selling Stockholder may use any one or more of the following methods when selling shares:
+ 
+
+ 
+ (i) 
+ ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
+ (ii) 
+ block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
+ (iii) 
+ purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
+ (iv) 
+ an exchange distribution in accordance with the rules of the applicable exchange;
+ (v) 
+ privately negotiated transactions;
+ (vi) 
+ settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;
+ (vii) 
+ broker-dealers may agree with the Selling Stockholder to sell a specified number of such shares at a stipulated price per share;
+ (viii) 
+ through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
+ (ix) 
+ a combination of any such methods of sale; or
+ (x) 
+ any other method permitted pursuant to applicable law.
+ 
+
+ Broker-dealers engaged by Selling Stockholder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from Selling Stockholder or, if any broker-dealer acts as agent for purchaser of shares, from purchaser in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
+ 
+
+ 43
+ 
+
+ In connection with the sale of the common stock or interests therein, Selling Stockholder may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. Selling Stockholder may also sell shares of the common stock short and deliver these securities to close out its short position, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. Selling Stockholder may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus as supplemented or amended to reflect such transaction.
+ 
+
+ Selling Stockholder may be deemed an underwriter within the meaning of the Securities Act and any broker-dealers or agents that are involved in selling the shares may be deemed to be underwriters within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the Series A common shares. In no event shall any broker-dealer receive fees, commissions and markups that, in the aggregate would exceed five percent (5%).
+ 
+
+ The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the Series B common shares. The Company has agreed to indemnify Selling Stockholder against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
+ 
+ Because Selling Stockholder may be deemed an underwriter within the meaning of the Securities Act, it will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus that qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by Selling Stockholder.
+ 
+ We agreed to keep this prospectus effective until the earlier of:
+ 
+
+ (i) the date on which the Series A common shares may be resold by the Selling Stockholder without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or 
+ 
+
+ 44
+ 
+
+ (ii) all of the Series A common shares have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. 
+ 
+
+ The resale Series A common shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
+ 
+
+ Under applicable rules and regulations under the Securities Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, Selling Stockholder will be subject to applicable provisions of the Securities Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by Selling Stockholder or any other person. We will make copies of this prospectus available to Selling Stockholder and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale.
+ 
+
+ 
+
+ BUSINESS OPERATIONS
+ 
+
+ Corporate History
+ 
+
+ The Company was incorporated under the name Mortlock Ventures, Inc. pursuant to the laws of the State of Nevada on September 19, 2005, for the purpose of acquiring and developing mineral properties. During the quarter ended March 31, 2008, the Company changed its business purpose and commenced concentrating on the telecommunications industry. The Company changed its name to China Tel Group, Inc. on April 8, 2008 and acquired Trussnet USA, Inc., a Nevada corporation on May 21, 2008.
+ 
+
+ On May 21, 2008, we entered into a reorganization and merger agreement pursuant to which our wholly owned subsidiary, Chinacomm Acquisition, Inc., merged with and into Trussnet Nevada. Pursuant to the terms of the reorganization and merger agreement, the acquisition subsidiary and Trussnet Nevada conducted a short-form merger under Nevada law, as a result of which Trussnet Nevada, as the surviving entity, became our wholly owned subsidiary. In exchange for all of the issued and outstanding Series A common shares of Trussnet Nevada, we issued 66,909,089 Company s Series B common shares. In addition, pursuant to the reorganization and merger agreement, certificates representing 57,500,000 Series A common shares held by our shareholders prior to the merger were returned to us and cancelled.
+ 
+
+ 45
+ 
+
+ On July 25, 2011, the Company changed its name to VelaTel Global Communications, Inc. The Company did so to better define the Company s positioning as a key leader in deploying and operating wireless broadband access networks worldwide.
+ 
+
+ Business Models
+ 
+
+ We currently have projects in China, the Balkans, Peru and Denmark. In China, our earlier projects are joint ventures with China based partners, each of which bear certain similarities in organizational structure designed to comply with restrictions on foreign investment and ownership of public telecommunications assets in effect under Chinese law. For those Chinese projects, we have entered into one or more related agreements whereby the Chinese partner agrees to transfer to the joint venture the partner s ownership rights in government-granted licenses and concessions that authorize transmission of data over WBA networks. The Company agrees to contribute to each joint venture its technical expertise in deploying and operating WBA networks, as well as the capital required to deploy and operate the networks. The organizational structure of each joint venture consists of a newly formed Cayman Islands Company, a newly formed Hong Kong Company that is a wholly owned subsidiary of the Cayman Company, and a newly formed Chinese Company that is a wholly owned subsidiary of the Hong Kong subsidiary and that also qualifies as a wholly foreign owned enterprise under Chinese law. The Company and the particular partner for each joint venture subscribe to shares in the Cayman Company to reflect the respective equity interests of each partner in the joint Company for possible future public listing of that venture s operations. The WFOE is the operating company through which the revenue and expense generated from the joint venture s operations will flow.
+ 
+
+ Our later projects in China have been structured differently than our earlier ones. For example, our Aerostrong and NGSN projects call for us to enter into an exclusive services agreement with each Chinese partner for the Company to deliver WBA and related services utilizing the partner s WBA licenses to operate a WBA network. Each partner will pay our operating subsidiary service fees pursuant to an exclusive services agreement.
+ 
+
+ With respect to our projects in the Balkans, subsequent to year-end 2011 we acquired a controlling equity interest in two operating companies in exchange for our payment of the capital expenditures and operating expenditures necessary to operate and expand the WBA networks in Croatia and Montenegro. These entities became or will become subsidiaries through business cooperation agreements by which the existing parent company of each will issue and deliver to us sufficient new common shares to represent our agreed ownership equity percentage.
+ 
+
+ 46
+ 
+
+ With respect to Peru, our operations are through our 95% owned subsidiary, VelaTel Peru, formerly known as Perusat. VelaTel Peru became our subsidiary through a stock purchase agreement where we, through our wholly owned subsidiary, Gulfstream Capital Partners, Ltd., a Cayman Island Company, acquired previously issued capital stock of VelaTel Peru from its shareholders.
+ 
+
+ Similarly, with respect to Denmark, our operations are through our 75% owned subsidiary, Zapna. Through our wholly owned subsidiary, Gulfstream, we acquired 75% of Zapna s previously issued capital stock from Zapna s existing sole shareholder pursuant to a stock purchase agreement.
+ 
+ Current Projects
+ 
+
+ The Company currently holds investments or contracts in nine projects that we refer to as: 
+ 
+
+ (i)
+ VelaTel Peru Network; 
+ (ii) 
+ VN Tech Fuel Cell Business; 
+ (iii) 
+ Business Agreement with NGSN; 
+ (iv) 
+ Exclusive Services Agreement with Aerostrong; 
+ (v) 
+ Sino Crossings Fiber Joint Venture; 
+ (vi) 
+ Zapna; 
+ (vii) 
+ Novi-Net Network;
+ (viii) 
+ Montenegro Connect Network; and 
+ (ix) 
+ China Motion MVNO Network. 
+ 
+
+ The Company s primary business model is to combine its engineering and deployment expertise, its equity funding relationships, its vendor partnership, radio frequency spectrum, fiber optic cable and concession rights assets acquired through a subsidiary or a joint venture relationship to create and operate WBA networks worldwide. We offer or will offer internet access, voice, video, and data services to the subscribers of various WBA networks we operate. The Company s secondary business model is to distribute products and services used in connection with WBA networks, specifically hydrogen fuel cells used as a back-up power source for certain transmission equipment, and devices and services that enable lower cost voice long distance and voice
+ 
+
+ 47
+ 
+
+ and data roaming fees to subscribers of cellular, voice over internet protocol or WBA networks. We have included references to projects or milestone events that may no longer be active to the extent such events are material to our overall financial condition and/or our ongoing operations.
+ 
+ The Company s present operational focus is on the deployment of WBA networks in emerging international markets, using primarily either 2.5 GHz or 3.5 GHz radio frequency spectrum. 
+ 
+ VelaTel Peru and Deployment of the VelaTel Peru Network
+ 
+
+ On April 15, 2009, we acquired 95% of the stock of VelaTel Peru, then known as Perusat), through Gulfstream, our wholly owned subsidiary, in exchange for one million of our Series A common shares valued at $2.50 per Series A common share and cash in the amount of $275,000. At the closing, we delivered the Series A common share consideration and received the VelaTel Peru shares. On April 7, 2010, we issued, and the selling shareholders of the VelaTel Peru stock accepted, 458,716 Series A common shares, valued at $0.545 per Series A common share, based on the closing price of our Series A common shares as of April 1, 2010, in exchange for the installments due through March 31, 2010 totaling $250,000. A final installment of $25,000 was due on or before June 30, 2010. The installment payment was released by VelaTel Peru in connection with a settlement agreement between the Company and Mario Navarro, VelaTel Peru s former general manager.
+ 
+
+ At the time we acquired our interest in VelaTel Peru, it was providing local and long distance telephone services to approximately 6,500 customers in nine cities in Peru (Lima, Arequipa, Chiclayo, Trujillo, Piura, Chimbote, Cusco, Ica and Huanuco). Based on its status as a licensed telephone operator, VelaTel Peru was granted a license and concessions to provide WBA and related telecommunications services utilizing radio frequency in the 2.5 GHz spectrum band covering these cities, other than Lima and its surrounding metropolitan area.
+ 
+
+ The first phase of the Company s deployment of a WBA network in Peru includes geographic coverage in the cities of Trujillo, Ica, Piura, Chiclayo and Chimbote. In September 2011, the Company launched its WBA network in these cities. The Company is selling prepaid and postpaid plans, and branded consumer devices using VelaTel Peru s brand name GO MOVIL. On January 5, 2012, we changed the name of Perusat to VelaTel Peru, S.A.
+ 
+
+ ZTE Contracts with VelaTel Peru
+ On August 5, 2010, VelaTel Peru (formerly Perusat) entered into contracts with ZTE for all equipment and services projected to be required for deployment and operation of the VelaTel Peru network. The total value of the contracts is up to 
+ 
+
+ 48
+ 
+
+ $41,057,659 for equipment and $6,941,960 for services. VelaTel Peru also issued purchase orders pursuant to the contracts for the equipment and services projected as necessary to complete deployment of phase 1 of the VelaTel Peru network. This equipment and services was specified as the amount required to provide geographic coverage in the eight cities where VelaTel Peru currently holds wireless broadband access licenses. The total of the first purchase orders is approximately $7.0 million for infrastructure equipment, for terminal equipment for resale to VelaTel Peru s subscribers and for engineering and other services, including network design and optimization, equipment installation, training of VelaTel Peru personnel, network operation management for two years and equipment warranty and spare parts for two years. Payment terms include 85% vendor financing to be provided by ZTE for infrastructure equipment covered under the first equipment purchase order, payable over two and one-half years, with a one year grace period commencing from the first bill of lading date in three equal semi-annual installments, including interest at six month LIBOR known as London Inter-Bank Offered Rate plus 2.5% per annum. Payment terms for subsequent infrastructure equipment purchase orders are 85% bank financing to be provided by commercial lenders in China, to be facilitated by ZTE, payable over six years with a two-year grace period, with the interest rate and other up-front fees to be negotiated and subject to bank underwriting requirements. ZTE will issue VelaTel Peru a $3 million payment voucher towards network expansion which VelaTel Peru can apply against up to 20% of the value of future purchase orders issued within three years of the date of the equipment contract. The duration of the contracts is up to seven years, during which ZTE will honor initial unit pricing. The contracts are subject to termination under certain commercial circumstances, including VelaTel Peru s right to terminate at any time, except as to purchase orders already issued, if VelaTel Peru determines the quantities already delivered and installed are adequate based on existing and projected subscriber revenue and taking into account the geographic and population coverage of the WBA licenses VelaTel Peru is able to secure.
+ 
+
+ 75% Equity Interest in VN Tech
+ 
+
+ VN Tech has expertise, relationships and contracts to become a leading international manufacturer, integrator, and applications developer and patent holder for hydrogen fuel cell power supply systems utilized in WBA networks. On April 1, 2011, the Company, VN Tech, and VN Tech s sole shareholder, Luo Hongye, entered into a subscription and shareholder agreement with Gulfstream Seychelles. Under the VN Tech original agreement, the parties were to form a series of entities including a Cayman Island parent company, a Hong Kong wholly owned subsidiary of the Cayman company and a PRC wholly owned subsidiary of the Hong Kong company that also qualified as a wholly owned foreign enterprise under Chinese law. The Company would subscribe to 51% and VN Tech to 49% of the equity interest of the entities comprising the joint venture. VN Tech would assign to the wholly foreign owned enterprise its tangible and intangible assets associated with Fuel Cell Systems, for which the Company would pay VN Tech five million of its Series A common shares.
+ 
+
+ 49
+ The parties subsequently formed the Hong Kong company contemplated under the VN Tech original agreement, VN Tech Investment, Ltd. (HK). The parties are in the process of forming the Cayman Island company under the name VN Tech Investment, Ltd., a Cayman Island Company.
+ 
+
+ On April 22, 2012, Gulfstream Seychelles and the Company entered into an amended and restated subscription and stockholder agreement with VN Tech and Luo. Under the VN Tech amended and restated agreement, the parties deemed it no longer necessary to form a wholly foreign owned enterprise in connection with this transaction. Instead, VN Tech will become the wholly owned subsidiary of VN Tech HK, which in turn will become a wholly owned subsidiary of VN Tech Cayman. Under the VN Tech amended and restated agreement, the Company s equity interest in the entities comprising the joint venture is increased from 51% to 75% and Luo is subscribing to the remaining 25% in the entities directly, instead of through VN Tech. Also, under the VN Tech amendment and restated agreement, the consideration the Company is paying Luo instead of VN Tech is increased from 50,000 to 100,000 Series A common shares. The terms of the VN Tech amended and restated agreement are otherwise similar, but not identical to, the VN Tech original agreement, which the VN Tech amended and restated agreement supersedes entirely.
+ 
+ The VN Tech amended and restated agreement became effective on April 22, 2012, when it was signed by all parties. All transfers of stock and other formalities described in the VN Tech amended and restated agreement are considered contractual obligations subsequent and not conditions precedent to the rights and obligations of the parties contemplated in the VN Tech amended and restated agreement. On April 22, the Company issued 100,000 Series A common shares to Luo pursuant to the VN Tech amended and restated agreement.
+ 
+ VN Tech completed an initial round of test trials commissioned by China s largest mobile telephone operator, China Mobile Limited. China Mobile Limited has submitted a comprehensive report of the test trial results to key ministries of the PRC s central government. Meanwhile, China Telecom Company, China s largest fixed line telephone operator, has also commissioned VN Tech to construct trial test sites in Beijing on its behalf. China s Communications Standards Association has designated Luo to head the technical committee that will develop national standards and specifications in China for the use of hydrogen fuel cells in the telecommunication industry. After adoption, these standards will also be submitted to the Telecommunications Standards Sector of the International Telecommunication Union. Once operations commence, the financial statements of VN Tech will be consolidated with those of the Company.
+ 
+
+ 50
+ 
+
+ NGSN Agreements
+ 
+
+ NGSN Business Agreement
+ On October 21, 2011, the Company and NGSN, a limited liability company organized under the laws of the PRC, entered into a business agreement.
+ 
+
+ The material terms of the NGSN business agreement are as follows:
+ 
+ (i) 
+ The Company, through one of its subsidiaries, will establish a holding company organized in the Cayman Islands. Cayman Co shall have a wholly owned subsidiary organized in Hong Kong. HK Co will have a wholly owned subsidiary organized in Beijing, China, that also qualifies as a wholly foreign owned enterprise under Chinese law. The wholly foreign owned subsidiary will be licensed to provide the services contemplated under the NGSN business agreement. The board of directors of Cayman Co will be comprised of three directors, two of whom shall be designated by us, including the chairman, and one of whom shall be designated by NGSN. HK Co and WFOE will each have one executive director, who shall be designated by the Company;
+ (ii) 
+ NGSN holds a PRC-issued license to provide value added telecommunication and information services throughout China. Such authorized services include internet information services, location based services and advertising services to government, enterprise and individual customers, e.g. fleet tracking by GPS, tracking people with Alzheimer disease, tracking children and pets, meter reading services, video surveillance services, trading services, distance services, education services and agriculture information services. NGSN has the ability to obtain and is required to apply for PRC-issued licenses to use radio frequency spectrum in the 1.8GHz and 3.5GHz bandwidth, and has special authorizations for the deployment of WBA networks in China. NGSN is required to authorize one of its subsidiary companies to carry out the telecommunication services business that is covered by NGSN s existing and future telecommunications business related licenses. The business of NGSN s subsidiary is to focus on the following territories: Heilongjiang Province, Jiangsu Province, Guangxi Autonomous Region, Guangzhou City, and Chongqing City. The parties may broaden the business territory through further discussions;
+ (iii) 
+ NGSN s subsidiary and a wholly foreign owned enterprise will enter into one or more agreements for the wholly foreign owned enterprise to act as the exclusive contractor for NGSN s subsidiary to provide deployment management, operation management and other services related to the telecommunications business. The wholly foreign owned enterprise and/or the Company will pay capital expenditures, operating expenditures and other negative cash flow in connection with the telecommunications business for NGSN s subsidiary. In principal, the total investment to be made by WFOE 
+ 
+
+ 51
+ 
+
+ and/or the Company, including third-party financing, will be no less than $10 million for each municipality and provincial capital city, and $8 million for any other city. The actual investment intensity and schedule will comply with a business plan to be prepared jointly by NGSN s subsidiary and the wholly foreign owned enterprise. NGSN s subsidiary shall pay a service fee to the wholly foreign owned enterprise, the calculation and payment terms of which shall be agreed to in the service agreement. The revenue of NGSN s subsidiary will be used in priority to reimburse the wholly foreign owned enterprise and/or the Company for any amounts paid for by either of them, and to repay any financing arranged by the wholly foreign owned enterprise and/or the Company. To insure the repayment of the wholly foreign owned enterprise s financing and payment of service fees to the wholly foreign owned enterprise, the revenue of NGSN s subsidiary will flow directly from the customers to the wholly foreign owned enterprise to the maximum extent authorized by Chinese law. If in case some revenues must be paid to NGSN s subsidiary in order to comply with Chinese law, it will be paid to a special account of NGSN s subsidiary that is jointly controlled by NGSN s subsidiary and the wholly owned foreign enterprise. The shareholders of NGSN s subsidiary are required to pledge their shares in NGSN s subsidiary to the wholly foreign owned enterprise as collateral for this repayment obligation;
+ (iv) 
+ The Company and NGSN are required to enter into a shareholders and share subscription agreement according to which NGSN will be entitled to obtain up to 45% of the shares of Cayman Co. 25% of the shares of Cayman Co will be issued to NGSN after the execution of the NGSN subscription agreement, 10% after NGSN obtains licenses to use 3.5GHz spectrum in the telecommunications business territory or other spectrum that is suitable for the telecommunications business, and the remaining 10% when New Co is approved for public listing on a stock exchange. In exchange for shares in Cayman Co, NGSN will insure the continuous validity of its telecommunications licenses during the term of operation of the New Co and shall use its best efforts to obtain additional telecommunications licenses, to secure NGSN s subsidiary s exclusive right of use of its telecommunications licenses and the effective performance of the service agreement. Based on the success in obtaining additional telecommunications licenses and the revenue of New Co, NGSN will be entitled to issuance of shares of our Series A common shares in amounts and based on milestones which will be set forth in the NGSN subscription agreement;
+ (v) 
+ As part of its capital contribution for its interest in New Co, the Company will transfer to WFOE its resources concerning the design, planning and engineering works of a WBA network in 29 major cities throughout China. NGSN s subsidiary and/or the wholly foreign owned enterprise shall have the right to use such resources when the business of NGSN s subsidiary is expanded to include the desired cities;
+ 
+ (vi) 
+ The parties were required to use their respective best efforts to complete follow up actions identified in the NGSN business agreement by the following dates: 
+ (a)
+ create the entities comprising New Co by end of December 2011; 
+ 
+
+ 52
+ 
+
+ (b) draft, negotiate and sign the services agreement and NGSN subscription agreement by end of December 2011; 
+ (c) NGSN will secure the radio frequency licenses by end of March 2012; and 
+ (d) the parties will use their best efforts to have New Co be listed in a domestic or overseas stock market in approximately three years.
+ 
+ We have completed the formation of the holding company entities contemplated by the NGSN business agreement, specifically NGSN Communications Network Co., Ltd. a Cayman Islands Company and NGSN Communications Network (HK) Co., Ltd., a Hong Kong Company. Pending formation of the WFOE contemplated under the NGSN business agreement, which will be an operating subsidiary of NSGN HK, we may begin providing services to NGSN under the NGSN exclusive services agreement described below through our existing WFOE, Beijing Yunji.
+ 
+ NGSN Exclusive Services Agreement
+ On February 1, 2012, the Company, through its wholly owned subsidiary, Gulfstream Seychelles, entered into an exclusive consulting and technical service agreement with NGSN contemplated by the NGSN business agreement. The material terms of the NGSN exclusive services agreement are as follows:
+ 
+ (i)
+ Since WFOE and NGSN s subsidiary are in the process of formation, the parties entered into the NGSN exclusive services agreement to expedite the progress of cooperation, with the expectation that NGSN and Gulfstream will be replaced by NGSN s subsidiary and WFOE after their respective formation and that the terms of the NGSN exclusive services agreement will be carried out by NGSN s subsidiary and WFOE;
+ (ii)
+ Gulfstream Seychelles will be the exclusive provider of the following consulting and technical support services:
+ (a) Project technical solution design;
+ (b) Project site selection and construction;
+ (c) Project financing;
+ (d) Equipment (including software) procurement, installation, operation and maintenance;
+ (e) Engineering;
+ (f) Bandwidth rent;
+ (g) Radio frequency design;
+ (h) System security and optimization;
+ (i) Project management and operation management;
+ (j) Warranty service; and
+ (k) Other services deemed necessary by the Parties.
+ 
+ 53
+ 
+
+ Service fees will be in amounts mutually agreed to by the Company and NGSN. Service fees for the first phase of the services contemplated to be included in the business plan are reflected along with other financial projections in a pro forma prepared by the Company and approved by NGSN. Unless earlier terminated or extended, the initial term of the NGSN exclusive services agreement is 15 years from the effective date. Unless either party sends a written notice of non-extension prior to expiration of the initial term, the NGSN exclusive services agreement will be automatically renewed for consecutive additional terms of five years, until otherwise terminated in accordance with the provisions of the NGSN exclusive services agreement. The grounds for early termination are prevention of performance due to a force majeure for a period of six months or more, or insolvency or bankruptcy of either party that would restrict the ability of that party to conduct its business. In the event of the termination of the NGSN exclusive services agreement, the amount of all service fees already accrued shall be paid within 30 days of demand;
+ (iii)
+ The Company will provide proof of funds for $500,000 within 30 days of the effective date and will pay as needed from such funds the amount required as registered capital for the wholly foreign owned enterprise, with the first injection of funds paid within five business days of completion of WFOE s registration to do business. The Company also committed to invest $18 million within twelve months of NGSN obtaining radio frequency spectrum licenses in 3.5 or 1.8 GHz spectrum as capital expenditures and operating expenses for the wholly foreign owned enterprise. The actual investment intensity and schedule will comply with the business plan that will be jointly prepared by NGSN s Subsidiary and the wholly foreign owned enterprise. The business plan will be attached to the NGSN subscription agreement as a binding addendum thereto. Failure to do so constitutes a material breach of the NGSN subscription agreement.
+ 
+
+ Aerostrong Agreements
+ 
+
+ Aerostrong Business Agreement
+ On November 11, 2011, the Company entered into a business agreement with Aerostrong Company Limited, a limited liability company organized under the laws of People s Republic of China. 
+ 
+
+ The material terms of the Aerostrong business agreement are as follows:
+ 
+ (i)
+ The Company will partially meet its contractual obligations with Aerostrong through Beijing Yunji, which is a technical service company engaged mainly in the business of telecommunication service related technology development, consulting, design, deployment management and operation management;
+ (i)
+ Aerostrong is a subsidiary of China Aerospace Science and Technology Group. Aerostrong holds a PRC-issued license for value added telecommunication services by which Aerostrong is authorized to provide these services nationwide and 
+ 
+
+ 54
+ 
+
+ internet access service in 18 major cities in China. Aerostrong has the ability to obtain and is required to apply for licenses to use radio frequency spectrum in the 1.8GHz and 3.5GHz bandwidth and other relevant bandwidths. Aerostrong has been commissioned by Beijing Shenzhou Software Technology Co., Ltd., a subsidiary of the China Aerospace, to deploy an internal WBA network and application platform for China Aerospace, known as the Commercial Network. The Commercial Network will cover the companies, research institutions and other entities owned by or affiliated with China Aerospace. The Commercial Network will include an electronic platform for human resources administration and financial management of China Aerospace, and various application services. The main target customers of the Commercial Network are all of the entities owned by or affiliated with China Aerospace, their customers, suppliers, employees and external users. The preliminary estimated total investment in the Commercial Network is 200 million RMB, and the estimated investment for Phase 1 of the Commercial Network is 50 million RMB. The telecommunications business of Aerostrong will cover all the business that is permitted by Aerostrong s telecommunication licenses and other related businesses. This includes wireless and wired broadband network access, special network access, cloud computing, application service, content service and integrated solutions.;
+ (iii)
+ Aerostrong and Beijing Yunji will enter into one or more agreements for the implementation of projects to be agreed to by both parties and for Beijing Yunji to act as the exclusive contractor for Aerostrong to provide deployment management, operation management and other services for the projects, collectively service agreement. Beijing Yunji and/or the Company will pay for all capital expenditures, operating expenditures and other negative cash flow in connection with the projects, and will arrange financing for the projects. The revenue generated by the telecommunication business will be used in priority to reimburse Beijing Yunji and/or the Company for any amounts paid for by either of them and to repay any financing arranged by Beijing Yunji and/or the Company. Aerostrong and Beijing Yunji will share the profit generated from the telecommunication business in a manner to be agreed to in the service agreement. The term of the service agreement will be no less than 15 years. The parties will make proper arrangement on revenue collection, financial control and other aspects to ensure the repayment of Beijing Yunji s financing and payment of service fees for the projects, the details of which will be specified in the service agreement;
+ (iv)
+ To facilitate market development of the projects, Aerostrong will establish a network business department, the staffing of which will be specified in the service agreement. Beijing Yunji will strictly comply with PRC laws, regulations and policies, especially those on internet security, information security and national security. Aerostrong will have the right to supervise the quality and content of Beijing Yunji s service to ensure Beijing Yunji s lawful operation;
+ 
+
+ 55
+ 
+
+ (v)
+ Where a project needs fiber connection for data transportation of its telecommunication business, the Company will provide to Aerostrong and/or Beijing Yunji access to the 34,000 km nationwide fiber optics network of which the Company has exclusive access rights, provided that the normal fees are paid to the fiber network operation company. The Company will provide to Beijing Yunji its resources concerning the design, planning and engineering works of a WBA network in 29 major cities in China; and
+ (vi)
+ The parties will use their respective best efforts to complete follow up actions identified in the Aerostrong business agreement by the following dates:
+ (a) the parties will draft, negotiate and sign the services agreement by end of December 2011; and 
+ (b) when radio frequency licenses are needed during the course of the telecommunication business, Aerostrong will apply for such licenses as soon as possible and is required obtain approval from appropriate government agencies in the shortest time.
+ 
+
+ Aerostrong Strategic Agreement
+ On April 19, 2011, Beijing Yunji entered into a strategic business agreement with Aerostrong, which is the exclusive services agreement contemplated under the business agreement. Under the Aerostrong strategic agreement: 
+ (i)
+ The parties will cooperate on application of jointly approved wireless broadband projects for which the rights and obligations of each party will be set forth in a separate project agreement. The initial cooperation projects the parties agree to develop are:
+ (a) Digital Lijiang management platform project in Guangxi Autonomous Region, (b) Shen Hua wireless broadband special network project for railway, and 
+ (c) overload wireless broadband surveillance projects in Shanxi Province. 
+ For each specific cooperation project, the parties shall jointly formulate the budget and implementation plan, and sign a project agreement in accordance with the principles set forth in the strategic business agreement.
+ (ii)
+ For each cooperation project, Aerostrong shall be responsible for the development and follow-up of governmental markets and industrial markets. The Company shall be responsible to provide the following support:
+ (a) project technical solution design;
+ (b) project site selection and construction;
+ (c) project financing;
+ (d) equipment (including software) procurement, installation, operation and maintenance;
+ (e) bandwidth rent;
+ (f) system security and optimization;
+ (g) project management and operation management;
+ 
+
+ 56
+ 
+
+ (h) warranty service; and
+ (i) other services needed for the development and implementation of each cooperation project.
+ 
+
+ Aerostrong shall not delegate or subcontract any part of a cooperation project without the prior written consent of the Company. If the implementation of any part of a cooperation project requires special qualification or expertise, Beijing Yunji may subcontract to a qualified third party, and will grant Aerostrong priority as subcontractor where Aerostrong has the qualifications and expertise to conduct such work.
+ (iii)
+ The term of the Aerostrong strategic agreement is from April 19, 2012 until all projects are completed and BeijingYunji receives the last payment from Aerostrong. During the term, neither party has the right to terminate the agreement except in the event of breach by the other party or the business operation term of the other party expires or is otherwise discontinued. Early termination due to breach shall not affect the right of a party to pursue legal liability of the other party.
+ (iv) For each project, Aerostrong shall: 
+ (a) prepare relevant materials required by clients, send relevant staff to coordinate with Beijing Yunji for implantation of relevant work, and bear relevant T&L costs; 
+ (b) where Aerostrong signs a project agreement with a project owner, remit payment to Beijing Yunji from payments it receives from the owner according to the agreement between Aerostrong and Beijing Yunji for such project; and 
+ (c) designate a contact person to communicate with Beijing Yunji at all times during implementation of a project.
+ (v) For each project, Beijing Yunji shall: 
+ (a) cooperate with Aerostrong and provide necessary information; 
+ (b) during development of cooperation projects, prepare tender documents, equipment cost estimates, site surveys, engineering cost estimates, overall budget control, and bear relevant costs; 
+ (c) during its service to Aerostrong, strictly comply with Chinese laws, regulations and relevant policies, particularly those regulations in relation with internet operation security, information security and state security, and accept supervision and to relevant advice from Aerostrong, and 
+ (d) designate a contact person to communicate with Yunji at all times during implementation of a project.
+ (vi)
+ With the exception of information that has already come into the public domain through no fault or disclosure by the receiving party, all information provided by both parties shall be deemed a business secret and shall only be used for purposes of the cooperation projects. Neither party shall disclose any information to a third party unless 
+ 
+
+ 57
+ 
+
+ the other party has agreed in writing, and shall be liable for any losses caused by its unauthorized disclosure. The term of confidentiality shall be the 730th day after termination of the Aerostrong strategic agreement; and
+ (vii)
+ Any amendment of the Aerostrong strategic agreement shall be in writing in the form of a supplementary agreement. All documents between the parties shall be in Chinese.
+ 
+
+ Sino Crossings Joint Venture
+ 
+
+ On November 11, 2010, the Company entered into two related subscription and shareholder agreements, collectively, Sino Crossings Agreements. The first agreement is between three parties: 
+ 
+
+ (i)
+ Shanghai Ying Yu Network Technology Ltd., a PRC limited liability company; 
+ (ii)
+ Azur Capital SDN BHD, a Brunei company; and 
+ (iii)
+ the Company. 
+ 
+
+ The second agreement is between Azur and the Company. 
+ 
+
+ Under the Sino Crossings Agreements, the parties will each contribute certain defined resources in order to upgrade existing installed but unimproved by infrastructure equipment fiber optic cable located in China with engineering services and equipment that will make it suitable for transmission of data and to charge market rate transport fees to telecommunications operators who use the lit fiber comprising the Sino Crossings network. On December 2, 2010, the Company issued 90,000 Series A common shares to Azur. 
+ 
+
+ The Company expects to utilize the fiber for the same purposes for its China based projects, but at a discount compared to amounts charged to third party telecommunication providers. On December 2, 2011, the Company and Azur amended their agreement to require Azur to undertake additional duties. On that same date, the Company issued 150,000 additional Series A common shares to Azur. The Company will record its equity interest in the profit and loss of the operating company to be formed pursuant to the Sino Crossings Agreements once the entity is formed and operations commence.
+ 
+ On July 13, 2012, Azur served a Notice of Arbitration against the Company. The claim was filed with the Hong Kong International Arbitration Centre and was brought pursuant to Article 3 of the United Nations Commission on International Trade Law Arbitration Rules for breach of the Sino Crossings Agreements. The claim alleges that Azur suffered damages and losses due to breaches by the Company in implementing the 
+ 
+
+ 58
+ 
+
+ 
+
+ terms of the Sino Crossings Agreements. In the claim, Azur demanded acknowledgment of termination and a declaration of rescission of the Sino Crossings Agreements. Further, it demanded indemnification by the Company for Azur s claimed damages, including $2,000,000 Azur paid to YYNT. On August 11, 2012, the Company responded to the allegations of Azur, asserted counterclaims against Azur and named additional parties the Company requested be joined into the arbitration proceeding. An arbitrator has been appointed, but there have been no rulings on the Company s request to join additional parties or on any substantive matters.
+ 
+
+ 75% Equity Interest in Zapna 
+ 
+
+ On April 3, 2012, the Company, through its subsidiary Gulfstream Seychelles, entered into and closed a stock purchase agreement with Omair Khan, the sole shareholder of Zapna, ApS, for the Company to acquire a 75% equity interest in Zapna. Pursuant to the Zapna stock purchase agreement, Khan transferred 75 shares of Zapna s capital stock to Gulfstream Seychelles, which represented 75% of the total shares issued and outstanding, and the Company issued 66,667 Series A common shares to Alhamd Holding Company, a Danish Company Khan formed.
+ 
+ Zapna launched commercial service in Denmark in 2010 and has since rolled out service with partners in several countries including Sweden, Norway, Finland, Spain, Germany and Holland. Zapna offers solutions for telephony operators and subscribers, and adaptable to WBA operators and subscribers, including mobile application IP rights, prepaid and postpaid billing platforms, front end portals, administration modules, roaming, SMS and voice termination services, and products to deliver such services. Zapna s products and services include distribution rights to a SIM overlay technology that provides subscribers access to reduced cost international long distance and roaming charges using their own mobile telephone. Zapna currently has 11 employees with headquarters in Denmark and a development team in Pakistan.
+ 
+
+ 75% Equity Interest in Herlong and its Subsidiaries Novi-Net and Montenegro Connect
+ 
+
+ On December 6, 2011, the Company entered into a business cooperation agreement with Herlong Investments, Ltd., a Cyprus corporation and others to acquire a 75% equity interest in Herlong and its operating subsidiaries, and its wholly owned operating subsidiaries, Novi-Net, d.o.o., a Croatia corporation and Montenegro Connect, d.o.o., a Montenegro corporation. The Republic of Croatia granted Novi-Net a nationwide license to provide WBA and related services. The license grants the use of 63 MHz of radio frequency spectrum in the 3.5 GHz bandwidth to serve Croatia s 4.5 million citizens. Since 2006, Novi-Net has been providing wireless broadband access services in five counties in northern Croatia under a regional license. Novi-Net currently owns a data center, a network core and 11base transceiver stations to provide WBA and related services to approximately 1,500 subscribers. Montenegro Connect holds a nationwide license in Montenegro, covering 40 MHz in the 3.5 GHz bandwidth. Montenegro 
+ 
+
+ 59
+ 
+
+ Connect is a greenfield operation with two BTS installed for testing purposes and no commercial operations or subscriber base. In exchange for its 75% equity interest in Herlong, the Company will contribute all capital and operating expenditures necessary to deploy and operate the Novi-Net Network and the Montenegro Network until each of Novi-Net and Montenegro Connect attain a positive cash flow.
+ 
+ On April 2, 2012, the Company closed its acquisition of 75% of Herlong by paying a 500,000. The actual amount paid was $668,402 USD. The amounts were a down payment towards the total budgeted capital and operating expenses, plus credit for a 528,086 that was approximately $649,546 USD based on the exchange rate on the closing date deposit on an initial equipment order placed with ZTE. Herlong issued the Company 48,843 common shares, which represents 75% of Herlong s total common shares issued and outstanding. The Company has made additional payments toward its Herlong acquisition in the form of $500,000 additional down payment to ZTE, and in the form of $105,128 paid to Joinmax Engineering & Consulting Services (HK), Ltd. for shipping logistics services. The payments to ZTE and to Joinmax were in the form of liabilities relieved through assignment of those creditors receivables with the Company through assignment to Ironridge Global, IV, Ltd.
+ 
+ China Motion Holdings Limited Stock Purchase Agreement
+ 
+ On November 27, 2012, the Company, through its wholly owned subsidiary Gulfstream Seychelles entered into a Stock Purchase Agreement with China Motion Telecom International Limited, its wholly owned subsidiary China Motion Holdings Limited, and Holdings 95% subsidiary ChinaMotion InfoServices Limited to acquire 100% of the capital stock of China Motion Telecom (HK) Limited. The material terms of the stock purchase agreement are as follows:
+ 
+
+ (i)
+ In exchange for a total purchase price of HK$45,000,000 (which equates to approximately US$5,806,000 based on the current exchange rate between Hong Kong dollars and U.S. dollars), we shall purchase 100% of the capital stock of China Motion Telecom (HK) Limited that shall be issued and outstanding as of closing.
+ (ii)
+ The capital stock of CMTHK currently consists of 1,000,000 ordinary shares with a par value of HK$1.00 each. However, prior to closing, seller shall cause the net balance of all loans and advances owed between CMTHK and seller to be capitalized and converted to capital stock of CMTHK that will be included in the stock to be purchased by the Company in exchange for the purchase price.
+ (iii)
+ The purchase price is payable as HK$4,500,000 (approximately US$580,600), which we delivered to an escrow agent within 15 business days of November 27, 2012, and the remaining balance of HK$40,500,000 (approximately US$5,225,400) to be delivered to seller at closing (along with release of our deposit from 
+ 
+
+ 60
+ 
+
+ escrow), in exchange for delivery of the CMTHK stock to the Company. The purchase price is subject to adjustment to net out the balances, as reflected on the books of CMTHK, of all cash, accounts receivable, other receivables, inventory, and prepayments to others against the balances of all accounts payable, accruals and other payable, and advance income received. The first adjustment shall occur and shall be paid or credited at closing based on the net balance as reflected on the books of CMTHK for the month ending immediately before closing, which shall exclude the balance of the shareholder loans. A second adjustment shall occur four months following closing, using the same method.
+ (iv)
+ Closing is contingent upon compliance with the Listing Rules of the Hong Kong Stock Exchange, upon which the shares of CMTHK are listed. Such compliance includes obtaining approval of the transaction by the shareholders of CMTIL. However, because CMTIL has already secured written consent to the transaction from a majority of its shareholders, no shareholder meeting is required, only the publication of a circular. Closing is also contingent upon consent or approval of any other third parties that may be required, which includes certain government agencies through which CHTHK holds licenses. The parties have set an outside closing date of January 31, 2013, or such other time as may be mutually agreed.
+ 
+
+ (v) If we fail or are unable to timely close the transaction by the outside closing date, our deposit shall be released to seller as seller s sole remedy. If seller fails or is unable to timely close the transaction by the outside closing date, our deposit shall be released to us and seller shall pay to us an additional sum equal to our deposit as Buyer s sole remedy.
+ 
+
+ (vi) For a period of one year following closing, seller shall assist us with managing relationships between the Company and key suppliers and customers by assigning an executive representative of seller who has significant past experience managing those relationships on behalf of the company.
+ 
+
+ (vii) Each party makes certain representations and warranties regarding their respective corporate status and authority, and seller regarding the financial status of CMTHK and its past operations, all upon terms the Company believes are standard in transactions of this nature. The maximum aggregate damages we may recover for one or more breach of seller s representations and warranties is 70% of the purchase price. Any such claim must be brought no later than 24 months after closing. The stock purchase agreement is governed under Hong Kong law and any disputes shall be resolved through arbitration conducted in Hong Kong.
+ 
+
+ Also on November 27, 2012, the Company issued a corporate guaranty, unconditionally and irrevocably guaranteeing to Seller each and every obligation of the Company under the stock purchase agreement.
+ 
+
+ 61
+ 
+
+ Other Agreements
+ 
+
+ Global MOU with ZTE
+ On August 9, 2010, the Company entered into a binding global memorandum of understating with ZTE for a strategic partnership to advance both parties interest in delivering innovative telecommunications solutions to individual, enterprise and government consumers worldwide. Under the terms of the Global ZTE MOU, ZTE will be the preferred and primary provider of customized equipment, software, consumer products, operation services and financing for the high-speed WBA networks the Company deploys in China, Peru, Croatia, Montenegro and other markets the Company enters in the future. The Company and ZTE will also work together to analyze consumer demand for new products and solutions, develop business plans to manufacture, market and sell ZTE s products and services, all with the goal to expand the reach of the Company s wireless broadband access networks. ZTE is obligated to treat the Company as its preferred customer in the supply of equipment, consumer products, operation services, solutions and financing. ZTE is also obligated to offer the Company a favorable vendor-financing proposal for each project identified by the parties and use its best efforts to facilitate our applications for debt financing by banks with which ZTE has relationships. The Company and ZTE will share equal ownership of intellectual property involved in equipment, software, consumer products, services or solutions through their joint efforts.
+ 
+
+ Agreements Related to Joint Venture to Acquire a 49% Interest in Chinacomm Cayman
+ 
+
+ Initial Framework Agreement
+ Trussnet Nevada was formed on April 8, 2008 and had no operations prior to entering into the reorganization and merger agreement. Its principal asset was a framework agreement dated April 7, 2008 with CECT Chinacomm Communications Co. Ltd., a PRC limited liability company, pursuant to which Trussnet Nevada had the contractual right to acquire a 49% equity interest in Chinacomm Limited, a Cayman Islands Company, for $196 million, of which we paid $5 million in 2008 pursuant to the Gulfstream Subscription Agreement. Under a joint venture relationship with Chinacomm, we have the right to subscribe to up to 49% of the equity interest in Chinacomm Cayman. We paid $5 million in May 2008 when we, through our wholly owned subsidiary Gulfstream Seychelles, entered into a Subscription and Shareholders Agreement dated May 23, 2008. The Gulfstream Subscription Agreement supplemented the Framework Agreement and provided that Chinacomm would transfer to Chinacomm Cayman rights Chinacomm claimed to control in WBA licenses in the 3.5GHz radio frequency spectrum band in 29 major cities throughout China. The proceeds of our investment were to be used to pay for equipment and services to design, engineer, install and operate a wireless broadband access network utilizing Chinacomm s spectrum licenses in order to bring wireless broadband access and other related services to residents, businesses and governmental agencies in China. Phase 1 of the Chinacomm 
+ 
+
+ 62
+ 
+
+ Network consisted of the deployment of the Chinacomm Network in the 12 cities of Beijing, Shanghai, Guangzhou, Shenzhen, Qindao, Nanjing, Chongqing, Harbin, Xian, Xiamen, Wuhan and Kunming.
+ 
+ Gulfstream Subscription and Related Agreements and Substitute TCP Subscription Agreement with Chinacomm
+ At the same time and as part of the same joint venture relationship contemplated by the Gulfstream subscription agreement described above and below, the parties entered into several other collateral agreements. Pursuant to an Exclusive Technical and Management Consulting Services Agreement dated May 23, 2008, Yunji Communications Technology (China) Co., Ltd., a wholly foreign owned enterprise to be formed as an indirect subsidiary of Chinacomm Cayman, contracted with Chinacomm Cayman to operate and service the Chinacomm network, in exchange for a portion of the revenue generated by Chinacomm Cayman from the Chinacomm network. The Company was to have formed, as a wholly owned subsidiary, Trussnet Gulfstream (Dalian) Co. Ltd., also a wholly foreign owned enterprise, to contract with Yunji China pursuant to which it was to have leased to Yunji China equipment required in the deployment of the Chinacomm Network and provide technical and management services to Yunji China for the procurement, installation and optimization of the equipment. These agreements were to have become effective when we paid in the minimum amount required under PRC law to capitalize Yunji China and Trussnet Dalian.
+ 
+ The Gulfstream Seychelles subscription agreement called for us to make certain payments in accordance with a schedule set forth therein and gives Chinacomm the right to terminate our rights if the payments are not made timely. Those payments are to be utilized to deploy the Chinacomm network. The Company attempted to raise capital to make the required payments, but was unable to do so within the time specified in the Gulfstream subscription agreement. 
+ 
+ In February 2009, Trussnet Capital Partners (HK), Ltd., a company wholly owned by our president, Colin Tay, proposed to Chinacomm to enter into a substitute subscription and shareholders agreement upon terms similar to the Gulfstream Seychelles subscription agreement in order for the Company not to lose the benefits of the Gulfstream Seychelles subscription agreement. Based on Chinacomm s prior relationship with Mr. Tay and additional benefits TCP was able to offer that the Company was not able to provide, Chinacomm entered into a substitute subscription and shareholders agreement and addendum thereto pursuant to which TCP acquired a 49% equity interest in Chinacomm Cayman. The additional benefits TCP was able to offer included negotiating extended payment terms with subcontractors who were performing services under contract with Trussnet Delaware to allow those services to continue, and the ability to arrange what ultimately became a $29 million operating loan that Chinacomm obtained from Hana Bank. The purchase price for TCP s 49% equity interest is the same as in the Gulfstream Seychelles subscription agreement, but the payment terms are improved in several respects.
+ 
+
+ 63
+ 
+
+ Payments are conditioned upon the renewal of the 3.5 GHz licenses for all 29 cities that are to be part of the Chinacomm network. In addition, if TCP was not able to meet the specific payment schedule set forth in the TCP subscription agreement, the agreement contained a provision that requires the parties to reach a new payment schedule through amicable negotiations. Like the Gulfstream Seychelles subscription agreement, the TCP Subscription Agreement and Addendum contemplates that the amounts paid to subscribe to the stock of Chinacomm Cayman will be used towards deployment of the Chinacomm network. 
+ 
+
+ Pursuant to the TCP subscription agreement and addendum, Chinacomm delivered a certificate in TCP s name for 2,450,000,000 shares of Chinacomm Cayman stock, representing 49% of a total of 5,000,000,000 shares authorized. However, notwithstanding physical custody of the certificate by TCP, the TCP Subscription addendum provides that the number of Chinacomm Cayman shares corresponding to the unpaid outstanding balance of the subscription price are pledged to Chinacomm Cayman and other parties to the TCP subscription agreement. It also provides that the parties are entitled to withdraw the pledged shares at their discretion if TCP fails to meet the payment schedule set for the in the TCP subscription agreement or any new schedule to which the parties agree.
+ 
+
+ Asset Purchase Agreement with TCP
+ On March 9, 2009, TCP sold the equity interest it purchased through the TCP subscription agreement and addendum to us pursuant to an asset purchase agreement for a $191 million non-recourse promissory note in favor of TCP and a pledge agreement of the equity interest in Chinacomm Cayman back to TCP as security for repayment of the TCP note. This effectively provided us with non-recourse bridge financing for our acquisition, which, for accounting purposes, is characterized as an option to purchase up to 49% of the authorized shares of Chinacomm Cayman. As we reduce the principal balance of the TCP note, TCP will deliver an equal amount towards the subscription price pursuant to the TCP subscription agreement and addendum. As we reduce the principal balance of the TCP note, TCP will also release to us shares of Chinacomm Cayman stock, free and clear of the pledge agreement, in the same proportion that the reduction in principal balance bears to the total principal balance of the TCP note.
+ 
+ Through a series of amendments dated March 5, March 16, April 9 and May 9, 2010: 
+ (i)
+ the maturity date of the TCP note was extended until December 31, 2011; 
+ (ii)
+ the interest rate of the TCP note was increased from 8% to 10% per annum; 
+ (iii)
+ we agreed to pay certain extension fees to TCP; and 
+ (iv)
+ TCP secured the option to accept payment of accrued interest and extension fees in the form of Series A common shares.
+ 
+
+ 64
+ 
+
+ On June 10, 2010, we issued 588,671 Series A common shares to TCP for the payment of $24,488,721 of interest and extension fees owed to TCP pursuant to the TCP note, as amended. These Series A common shares were delivered in satisfaction of the amounts we owed to TCP at the time of the stock issuance. During 2010, in addition to issuance of Series A common shares to TCP, we also paid TCP $11,001,000 towards accrued interest and extension fees on the TCP Note, and we paid TCP $2,750,000, reducing the principal balance of the TCP Note to $88,250,000.
+ 
+
+ Assignment of TCP Subscription Agreement and Cancellation of the TCP Note
+ On April 4, 2011, the Company and TCP entered into an assignment of subscription agreement and cancellation of promissory note. The TCP assignment agreement relates to the TCP subscription agreement and addendum, the asset purchase agreement with TCP and the TCP note. The material terms of the TCP assignment agreement are as follows:
+ 
+
+ (i)
+ The consideration TCP received in entering into the assignment agreement included: 
+ (a) the Company being relieved from the obligation to pay past and future interest under the TCP note, while maintaining its right to acquire up to 49% of the shares of Chinacomm Cayman which advanced the Company s financial interests by reducing the total acquisition cost of the rights the Company has the right to acquire; 
+ (b) the employment agreement between the Company and TCP s sole shareholder, Colin Tay,;
+ (c) the issuance of 669,091 of the Company s Series B common shares to Colin Tay; and 
+ (d) the interest of TCP and Colin Tay, as shareholders of the Company, in the Company s future financial success.
+ (ii)
+ Except as set forth in the assignment agreement, all existing rights and future obligations of both parties under the asset purchase agreement, the TCP note and the pledge agreement were cancelled and terminated. Specifically, TCP waived entitlement to $14,225,232.87 of past interest accrued, but unpaid, under the TCP note and all future interest. TCP also returned the original TCP note to the Company, marked CANCELLED; 
+ (iii)
+ TCP was required to deliver to the Company the original share certificate representing 2,450,000,000 shares of Chinacomm Cayman with appropriate endorsement to enable the Company to seek issuance of a new certificate in the Company s name for all 2,450,000,000 of the Chinacomm Cayman shares represented by that certificate; and
+ 
+
+ (iv)
+ The Company and TCP each released the other from any past breach or default, if any, either would be entitled to assert against the other relating to performance or non-performance of any obligation, or the accuracy of any representation or warranty contained in any of the assignment agreement, the TCP note and the pledge agreement.
+ 
+
+ 65
+ 
+
+ Professional Services Agreement with Joinmax Engineering & Consultants (HK), Ltd.
+ 
+
+ On April 10, 2009, the Company and Joinmax Engineering & Consultants (HK) Ltd. entered into an agreement for professional services. The professional services Joinmax provides to the Company consist of: 
+ 
+
+ (i)
+ architectural and engineering services; 
+ (ii)
+ project management services; 
+ (iii)
+ site acquisition services; 
+ (iv)
+ deployment supervision services; 
+ (v)
+ general administrative services; and 
+ (vi)
+ any other professional services the Company deems necessary to deploy the Chinacomm network. 
+ 
+
+ Joinmax contract includes the same types of services necessary to deploy fully the Golden Bridge network. The Company is obligated to pay Joinmax for the professional services it provides to the Company at Joinmax standard hourly rates and/or based upon a fixed fee for specific services. The Company has the option to pay any Joinmax invoice by tendering Series A common shares in lieu of a cash payment for the professional services. The Series A common shares are to be paid at a price equal to the lesser of: 
+ 
+
+ (i)
+ $0.95; or
+ (ii)
+ 80% of the volume weighted average of the closing price of the Series A common shares for the 30-day period prior to each payment due date of an invoice.
+ 
+ Effective as of December 10, 2011, the Company and Joinmax entered into an amendment to agreement for professional services pursuant to which the Company agreed to a set payment schedule for the total amount owing Joinmax for professional services rendered pursuant to the Joinmax professional services agreement and established that the price per Series A common shares would be no less than $0.10 per Series A common share. All of the other provisions of the Joinmax professional services agreement remained the same.
+ 
+ Effective as of January 6, 2012, the Company and Joinmax entered into a second amendment to agreement for professional services pursuant to which the Company was provided the right, at its sole discretion, to pay all or any of the total amount due to Joinmax prior to any revised payment, in which case the price per Series A common 
+ 
+
+ 66
+ 
+
+ share is calculated based upon the same formula set forth in the Joinmax first amended professional services agreement. All of the other provisions of the Joinmax professional services agreement and the first amended professional services agreement remained the same.
+ 
+
+ Joinmax has invoiced the Company $25,162,992 for professional services it provided to the Company, for which the Company has issued 149,512,954 Series A common shares to Joinmax as payment in full for all services rendered. All shares issued to Joinmax were prior to the Company s reverses stock split completed on July 19, 2012.
+ 
+
+ Ironridge Global IV, Ltd. Financing of the Company
+ 
+
+ On July 5, 2012, the Company issued 1,170,000 Series A common shares to Ironridge Global IV, Ltd. The initial issuance was pursuant to an Order for Approval of Stipulation for Settlement of Claims between the Company and Ironridge, in settlement of $1,367,693 of accounts payable of the Company which Ironridge had purchased from certain creditors of the Company, in an amount equal to the Assigned Accounts plus fees and costs. The assigned accounts relate to: 
+ 
+
+ (i)
+ the remaining down payment for infrastructure equipment and software purchased from ZTE for expansion of its Croatia WBA network and deployment of the Montenegro Connect WBA network; 
+ (ii)
+ the cost of shipping, insurance and other transport logistics services to deliver the equipment and software described above from its place of manufacture in China to its ultimate destinations; 
+ (iii)
+ the proof of funds deposit required as registered capital for formation of a PRC operating company pursuant to the exclusive services contract between the Company and NGSN; and 
+ (iv)
+ amounts previously financed for consumer terminals delivered to VelaTel Peru as inventory for resale to customers.
+ 
+
+ The Order was entered on July 3, 2012 by the Superior Court of the State of California, County of Los Angeles, Central District. In addition to the initial issuance, the Order also provides for an adjustment in the total number of Series A common shares which may be issuable to Ironridge, based on a calculation period for the transaction defined as that number of consecutive trading days following the date on which the Initial Shares have been issued, received in Ironridge s account in electronic form and fully cleared for trading required for the aggregate trading volume of the Series A common hares, as reported by Bloomberg LP, to exceed $6.5 million. Pursuant to the Order, Ironridge will receive an aggregate of: 
+ 
+
+ 67
+ 
+
+ (i)
+ 1,000,000 Series A common shares, plus that number of Series A common shares (with an aggregate value equal to 
+ (ii)
+ the sum of the claim amount plus a 6% agent fee and plus Ironridge s reasonable attorney fees and expenses (less $10,000 previously paid); and 
+ (iii)
+ divided by 80% of the following: the volume weighted average price of the Series A common shares during the calculation period, not to exceed the arithmetic average of the individual daily VWAPs of any five of each consecutive twenty trading days during the calculation period (any increment with fewer than twenty trading days will have the days added to the final increment). 
+ 
+
+ The Order further provides that if, at any time during the calculation period, the total Series A common shares previously issued to Ironridge are less than any reasonably possible final amount, or a daily VWAP is below 80% of the closing price on the day before the issuance date, Ironridge will have the right to request (subject to the limitation below), and the Company will, upon Ironridge s request, reserve and issue additional Series A common shares, subject to a 9.99% beneficial ownership limitation specified in the Order. At the end of the calculation period: 
+ 
+
+ (i)
+ if the sum of the Initial Issuance and any additional issuance is less than the final amount, the Company shall issue additional Series A common shares to Ironridge, up to the final amount; and 
+ (ii)
+ if the sum of the Initial Issuance and any additional issuance is greater than the final amount, Ironridge shall promptly return any remaining Series A common shares to the Company and its transfer agent for cancellation.
+ 
+ In connection with the transaction, Ironridge represented that it does not hold any short position in the Series A common shares and warranted that it would not to engage in or affect, directly or indirectly, any short sale of the Series A common shares.
+ 
+ On September 13, 2012, the Company issued the 2,225,000 additional Series A common shares to Ironridge. Each issuance to Ironridge is exempt from the registration requirements of the Securities Act, pursuant to Section 3(a)(10) thereof, as an issuance of securities in exchange for bona fide outstanding claims, where the terms and conditions of such issuance are approved by a court after a hearing upon the fairness of such terms and conditions.
+ 
+
+ Ironridge has paid the Company s creditors from whom it received assignments of their accounts receivables against the Company the following amounts: 
+ 
+
+ 68
+ 
+
+ (i)
+ $300,000 on or about August 13, 2012 (with an additional $200,000 payable on or about October 13, 2012 but not yet paid) to ZTE for the Croatia and Montenegro equipment order described above; 
+ (ii)
+ $105,128 on or about November 7, 2012 to Joinmax for shipping logistics services associated with the ZTE equipment order; 
+ (iii)
+ $350,000 on or about August 13, 2012 and $75,000 on or about September 13, 2012 (with an additional $75,000 payable on or about October 13, 2012 but not yet paid) for proof of funds deposit as registered capital for NGSN project s PRC operating company; and 
+ (iv)
+ two installments of $87,521.67 each on or about August 2, 2012 and September 13, 2012 to Success Action Limited for consumer terminal inventory previously financed and delivered to VelaTel Peru.
+ 
+
+ Isaac Organization, Inc. New Agreements
+ 
+
+ Line of Credit Loan Agreement and Promissory Note with Isaac Organization, Inc.
+ On July 1, 2011, the Company entered into a line of credit loan agreement and promissory note with Isaac Organization, Inc. In the first note, the Company and Isaac agreed that the Company may borrow up to $5.0 million in such installments and subject to the same procedure for making funding requests as apply to the term Funding Request as defined in Section 1.7 of the second amended and restated Isaac stock purchase agreement between the Company and Isaac. For each funding request, Isaac was entitled to retain 5% of the amount requested as a set-up fee and compensation for Isaac s due diligence. Each holdback is added to the principal balance and accrues interest along with the amount disbursed and outstanding from time to time. Amounts borrowed pursuant to the first note bear simple interest at the rate of ten percent per annum. The principal balance borrowed was due and payable on December 31, 2011.
+ 
+ Extension Agreement and Second Line of Credit Promissory Note with Isaac
+ On February 23, 2012, the Company entered into the following two agreements with Isaac: 
+ 
+
+ (i)
+ Agreement to Extend and Increase First Line of Credit Loan Agreement and Promissory Note, Cancel Stock Purchase Agreement, and Grant Option in VN Tech Agreement; and 
+ (ii)
+ Second Line of Credit Loan Agreement and Promissory Note.
+ 
+ Although the credit limit under the first note was $5,000,000 and the due date of the first note was December 31, 2011, Isaac advanced funds to the Company in excess of the credit limit, including advances made after the due date. In entering into the 
+ 
+
+ 69
+ 
+
+ extension agreement, the parties agreed to extend the due date for the first note to June 30, 2012 and to increase the credit limit under the first note to reflect the total amount borrowed, namely $6,385,000 disbursed, plus 5% holdback fees totaling $336,053, for a total principal balance of $6,721,053. Interest in the amount of $332,794 had accrued on the principal balance, for a total amount due as of February 23, 2012 of $7,053,847. In the extension agreement, the principal balance of the first note is increased to $7,425,102, representing the pre-extension total amount due plus an additional 5% holdback fee of $371,255. Interest accrues on the increased principal balance at the rate of 10% per annum.
+ 
+ The extension agreement provides that Isaac will be granted an option to at any time convert all or any portion of the balance of principal and interest due under the first note to Series A common shares in favor of Isaac or any of its assigns. The details of the conversion feature are to be agreed to when the Company has additional authorized Series A common shares available for issuance.
+ 
+ The extension agreement also grants Isaac an option to acquire the Company s 51% joint venture interest in the VN Tech agreement. The extension agreement provides that the price of Isaac s option is to be determined based on Isaac s due diligence and a mutually agreed valuation of the joint venture. If Isaac exercises its option to acquire the Company s 51% interest in the VN Tech agreement, the agreed value of that interest will be treated as an offset to the amount otherwise due under the first note.
+ 
+
+ Finally, the extension agreement provides for the cancellation and termination of all unperformed obligations of Isaac and the Company under the second amended and restated Isaac stock purchase agreement described above.
+ 
+ In the second note, the Company promises to pay to the order of Isaac the principal sum of $7,368,421, or so much thereof as may be disbursed to, or for, the benefit of the Company by Isaac, in Isaac s discretion and subject to Isaac s approval of budgets identifying the Company s proposed use of each funding request. For each funding request, Isaac will retain a 5% holdback as a set-up fee and compensation for Isaac s due diligence. Each holdback will be added to the principal balance and will accrue interest along with the amount disbursed and outstanding from time to time. The total potential amount to be disbursed, net of the 5% holdback fees, is $7,000,000. The amounts borrowed pursuant to the second note will bear interest at the rate of 10% per annum. Interest will be calculated based on the principal balance, as may be adjusted from time to time to reflect additional advances and/or partial repayments made on the second note. The principal balance and all accrued interest is due on December 31, 2012.
+ 
+ The second note provides that Isaac will be granted an option to, at any time, convert all or any portion of the balance of principal and interest due under the second note to Series A common shares in favor of Isaac or any of its assigns. The details of the 
+ 
+
+ 70
+ 
+
+ conversion feature are to be agreed to when the Company has additional authorized Series A common shares available for issuance. 
+ 
+
+ Amended and Restated Loan Agreement with Isaac 
+ On April 25, 2012, the Company, entered into an amended and restated loan agreement with Isaac. The amendment amends the extension agreement by cancelling the extended first note, which is substituted for fourteen promissory notes in the principal amount of $500,000.00 each, plus one promissory note in the amount of $425,101.71. The maturity date of amended Isaac note #1 is April 30, 2012, and the maturity date of each succeeding amended Isaac note #2-#15 is the 15th day and the last calendar day of each month in succession after April 30, 2012. Interest accrues on each amended Isaac note at 10% per annum from February 23, 2012. The Company may prepay any of the amended Isaac notes in whole or in part prior to its maturity date without penalty. The amendment confirms the cancellation of the second amended and restated Isaac stock purchase agreement. All other terms of the extension agreement that are not consistent with the amendment are of no further force and effect. The amendment has no effect on the second note.
+ 
+
+ Line of Credit Promissory Note with Weal Group, Inc.
+ 
+
+ On March 5, 2012, the Company entered into a line of credit promissory note with Weal Group, Inc. in the principal amount of up to $1,052,632. The disbursement amount of the Weal note is for up to $1,000,000. Weal will retain a 5% holdback as a set-up fee and compensation for Weal s due diligence. The difference between the disbursement amount and the principal amount represents the 5% holdback fee. The maturity date of the Weal note is March 5, 2013. The Company has the right to prepay the Weal note in whole or in part prior to its maturity date and without penalty. The Weal note bears interest on its principal amount at 10% per annum. The Weal note provides, as in the Isaac second note, a conversion feature granting an option to convert all or a portion of the balance of principal and interest due under the Weal note to Series A common shares. The details of the conversion feature will be agreed to between the parties to the Weal note when the Company has additional authorized Series A common shares available for issuance and when Isaac and the Company have agreed to a conversion feature as to the Isaac second note. Weal will have the same option to convert that Isaac will have when it is agreed to between the Company and Isaac with respect to the Isaac second note. Upon that agreement, the parties to the Weal note will enter into an amendment to reflect the agreed upon conversion feature.
+ 
+
+ Competition
+ 
+
+ The countries in which we operate are highly competitive. We compete with existing suppliers and new competitors who continue to enter the markets in each of these countries. Our subsidiaries and joint ventures compete with several other major WBA 
+ 
+
+ 71
+ 
+
+ and related companies. Many of these competitors are well established with larger and better developed WBA and telecommunications networks and support systems, longer-standing relationships with customers and suppliers, greater name recognition and greater financial, technical and marketing resources than our subsidiaries and joint venture partners. Competitors in any of these markets may reduce the prices of their services and/or products significantly or may offer WBA connectivity packaged with their other products or services that none of our businesses can offer to its subscribers. 
+ 
+ We also expect existing and prospective competitors to adopt technologies or business plans similar to our business plans for our projects or seek other means to develop services competitive with these companies, particularly if their services prove to be attractive in their respective target markets. There can be no assurances that there will be sufficient customer demand for services offered over the various networks we are deploying in the same markets to allow multiple operators to succeed. The industries in which we operate are continually evolving. Our services may become obsolete, and we may not be able to develop competitive services or products on a timely basis or at all. Other competing technologies may be developed that have advantages over WBA technology protocols that we employ. Operators of other networks based on those competing technologies may be able to deploy their networks at a lower cost and more quickly than the cost and speed with which our subsidiaries and joint ventures can deploy their respective networks and/or businesses, which may allow those operators to compete more effectively. 
+ 
+
+ Effects of Government Regulation
+ 
+ The regulatory authorities in each of the countries where we do business have significant discretion in granting licenses, permits and authorizations requisite for the operation of our subsidiaries and other projects. These regulatory authorities may have no obligation to renew the licenses, permits and authorizations when they expire. As a result, those authorities may refuse to grant any licenses, permits or authorizations, or renewals thereof, that our subsidiaries and joint ventures may seek for the operations of their respective businesses. Any of our operating subsidiaries or joint venture partners do not receive the necessary licenses, permits and authorizations, they may have to cease operations or contract operations with third parties who hold the appropriate licenses, permits and authorizations. In addition, even where our operating subsidiaries or joint venture partners currently hold licenses, permits or authorizations or successfully obtain licenses, permits or authorizations in the future, they may be required to seek modifications to the licenses, permits or authorizations or the regulations applicable to the licenses, permits or authorizations to implement the Company s business strategy. The occurrence of any of these events would have a material adverse effect on our businesses.
+ 
+
+ 72
+ 
+
+ These laws and regulations and their application to our businesses are subject to continual change, as new legislation, regulations or amendments to existing regulations are adopted from time to time by governmental or regulatory authorities in the countries where we operate. Current or future regulations may directly affect the breadth of services our operating subsidiaries and joint venture partners are able to offer and may affect the rates, terms and conditions of services they can provide to the public for a fee. Regulation of companies that offer competing services, such as cable and DSL providers and incumbent telecommunications carriers, also affect the business of our operating subsidiaries and joint venture partners indirectly. 
+ 
+
+ In addition, the regulatory authorities in any of the countries where we operate may in the future restrict the ability to manage subscribers use of their respective networks and/or businesses, thereby limiting the ability to prevent or manage excessive bandwidth demands on our networks. Conversely, regulators in any given country may limit the bandwidth to be used by subscribers applications or customers, in part by restricting the types of applications that may be used over these networks and businesses. If applicable regulatory authorities were to adopt regulations that constrain the ability to employ bandwidth or fiber management practices, excessive use of bandwidth-intensive applications would likely reduce the quality of their services for all subscribers. A decline in the quality of the services or products provided could result in loss of customers or litigation from dissatisfied subscribers. Any of these developments could have a material adverse effect on our business.
+ 
+
+ Any of our operating subsidiaries or joint venture partners may engage in business activities that regulators consider to be outside their authorized scope of their WBA licenses or permitted activities. For companies that exceed the scope of their business licenses or permitted activities or operate without a license or needed approval in the past, but are now compliant, as well as for any companies that may currently operate without the appropriate licenses, renewals or approvals or outside the scope of their business licenses or permitted activities, the relevant regulatory authorities have the authority to impose fines or other penalties. These fines or penalties can be sometimes as much as five to ten times the amount of the illegal revenues generated by these companies and may require the disgorgement of profits or revocation of the business licenses, permits or authorizations of the offending company. Fines or penalties of this nature might have a material adverse effect on our business.
+ 
+ Investment Policies
+ 
+
+ The Company does not have an investment policy at this time. Any excess funds the Company has on hand will be deposited in interest bearing notes, such as term deposits or short-term money instruments. There are no investment restrictions on funds held by the Company. Presently, the Company does not have any excess funds to invest.
+ 
+
+ 73
+ 
+
+ Employees
+ 
+
+ Currently, the Company including all its subsidiaries has approximately 60 full time employees. Approximately 20 of the Company s former employees in its corporate headquarters in San Diego are working for the Company as independent contractors.
+ 
+ Patents and Trademarks
+ 
+
+ The Company does not hold any patents or material trademarks. However, the Company is in the process of having VelaTel and other local brand names and website domains trademarked in the United States and in the other locations in which the Company is doing business or anticipate doing business. 
+ 
+
+ Environmental Expenditures
+ 
+
+ The Company has not made any material expenditure on compliance with environmental laws or regulations in connection with any of our businesses world-wide.
+ 
+
+ Available Information
+ 
+
+ Shareholders may read and copy any material we file with the SEC at the SEC s Public Reference Room at 100 F Street, N.E., Washington, DC, 20549. Shareholders may obtain information on the operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains reports, proxy and information statements, and other information which we have filed electronically with the SEC by accessing http://www.sec.gov. The address of the Company s website is http://www.velatel.com.
+ 
+
+ Properties
+ 
+
+ We currently occupy space pursuant to a four year lease effective June 15, 2012 15 at 5950 La Place Court, Carlsbad, California 92008. These facilities consist of 6,200 square feet. Monthly lease payments are $9,300, subject to concessions and annual adjustments. Gulfstream Seychelles, one of our subsidiaries currently occupies office space pursuant to a thirty-eight month lease commencing on August 1, 2011. Monthly lease payments are approximately $9,150.
+ 
+
+ Velatel Peru, our 95% subsidiary, currently occupies space at Avenida Camino Real 493, San Isidro, Lima, Peru. The lease commenced in March, 2011. These facilities consist of approximately 1,600 square feet. Monthly lease payments are $1,000. Additionally, the company has retail stores in 5 provincial cities with monthly lease payments totaling approximately $1,250. There are also site leases that house equipment and antennae with monthly lease payments totaling approximately $ 8,650.
+ 
+
+ 74
+ Zapna, our 75% owned subsidiary, currently occupies office space at Smedeholm 13 B Herlev, Denmark, the monthly lease payments are approximately $1,150.
+ 
+
+ Novi-Net, our 75% owned subsidiary, currently occupies office space at Merhatovec 5, 40314 Selnica, Republic of Croatia, the monthly lease payments are approximately $3,400. Additionally, the site lease that house equipment and antennae have monthly lease payments totaling approximately $580.
+ 
+
+ Montenegro Connect, our 75% subsidiary, occupies office space with monthly lease payments of approximately $4,700.
+ 
+
+ DILUTION
+ 
+
+ Assuming conversion of all of the Series B preferred shares, there will be at least 184,445,928 Series A common shares outstanding. This does not include any Series A common shares issuable pursuant to the funding commitment with Isaac Organization. 
+ 
+
+ Current shareholders shall experience dilution in the value of their Series B common shares. However, it is not possible to determine the price to the public in any sale of the Series A common shares by Selling Stockholder and Selling Stockholder reserves the right to accept or reject, in whole or in part, any proposed purchase of Series A common shares. Accordingly, Selling Stockholder will determine the public offering price, the amount of any applicable underwriting discounts and commissions and the net proceeds at the time of any sale. Selling Stockholder will pay any underwriting discounts and commissions.
+ 
+
+ Further Dilution
+ 
+
+ The Company may issue equity and debt securities in the future. The Company may also issue Series A common shares and warrants in payment of existing debt to its note holders. These issuances and any sales of additional Series A common shares may have a depressive effect upon the market price of our Series A common shares and investors in this offering. 
+ 
+
+ 
+
+ DIVIDEND POLICY
+ 
+
+ We have never declared or paid any dividends. In addition, we anticipate that we will not declare dividends at any time in the foreseeable future. 
+ 
+
+ Instead, we will retain any earnings for use in our business. This policy will be reviewed by our board of directors from time to time in light of, among other things, our earnings and financial position.
+ 
+
+ 75
+ No distribution may be made if, after giving it effect, we would not be able to pay its debts as they become due in the usual course of business; or the Company s total assets would be less than the sum of its total liabilities plus (unless the articles of incorporation permit otherwise) the amount that would be needed, if we were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution. The board of directors may base a determination that a distribution is not prohibitive either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation of other method that is reasonable in the circumstances. 
+ 
+
+ 
+
+ MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL
+ CONDITION AND RESULTS OF OPERATIONS
+ 
+
+ Forward-Looking Statements
+ 
+
+ This following information specifies certain forward-looking statements of our management. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as may , shall , could , expect , estimate , anticipate , predict , probable , possible , should , continue , or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict, and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.
+ 
+ Forward-looking statements include, but are not limited to, the following:
+ 
+
+ 
+ 
+ 
+ Statements relating to our future business and financial performance;
+
+ 
+ 
+ 
+
+ 
+ 
+ Our competitive position;
+
+ 
+ 
+ 
+
+ 
+ 
+ Growth of the telecommunications industry in China, Peru, Croatia, Montenegro, Denmark and other countries in which we plan to conduct business; and
+
+ 
+ 
+ 
+
+ 
+ 
+ Other material future developments that you may take into consideration.
+
+ 
+ We believe it is important to communicate our expectations to our shareholders. However, there may be events in the future that we are not able to predict accurately over which we have no control. The risk factors and cautionary language discussed in this prospectus provide examples of risks, uncertainties and events that may 
+ 
+
+ 76
+ 
+
+ cause actual results to differ materially from the expectations we described in our forward-looking statements, including among other things:
+ 
+
+ 
+ 
+ 
+ Competition in the industry in which we do business;
+
+ 
+ 
+ 
+
+ 
+ 
+ Legislation or regulatory environments;
+
+ 
+ 
+ 
+
+ 
+ 
+ Requirements or changes adversely affecting the businesses in which we are engaged; and
+
+ 
+ 
+ 
+
+ 
+ 
+ General economic conditions.
+
+ 
+ You are cautioned not to place undue reliance on these forward-looking statements. The assumptions used for purposes of the forward-looking statements represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. We cannot guaranty that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statement
+ 
+ The following information should be read in conjunction with the information contained in the Consolidated Financial Statements included within this
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001366367_yadkin_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001366367_yadkin_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..66b2d2301d795351e1fb421f5737ef184b12a9b4
--- /dev/null
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@@ -0,0 +1 @@
+This summary highlights selected information contained elsewhere or incorporated by reference in this prospectus and may not contain all the information that you need to consider in making your investment decision to purchase the shares. You should carefully read this entire prospectus, as well as the information incorporated by reference herein and therein, before deciding whether to invest in the shares. You should carefully consider the sections entitled Risk Factors in this prospectus and the documents incorporated by reference herein and therein to determine whether an investment in the shares is appropriate for you. The Company Yadkin Valley Financial Corporation is a bank holding company incorporated under the laws of North Carolina ( Yadkin or the Company ) to serve as the holding company for Yadkin Valley Bank and Trust Company, a North Carolina chartered commercial bank, (the Bank ). The Bank began operations in 1968. In 2006, Yadkin was formed to serve as a holding company for the Bank. We offer a wide range of traditional banking products and services for small-to medium-sized businesses, professionals and other individuals in our markets, including commercial and consumer loan and deposit services, as well as mortgage services. We are a community-oriented financial institution. We seek to be the provider of choice for financial solutions to local businesses, professionals and other individuals in our markets who value exceptional personalized service and local decision making. We currently operate in the central piedmont, Research Triangle area and the northwestern region of North Carolina and upstate counties of South Carolina. We believe that we operate in attractive banking markets with long-term growth potential. At September 30, 2012, we had total assets of $1,920.4 million, total gross loans outstanding including loans held for sale of $1,383.6 million, total deposits of $1,651.5 million, and shareholders equity of $155.2 million. Our principal executive offices are located at 209 North Bridge Street, Elkin, North Carolina 28621-3404, and the telephone number is (336) 526-6300. Our website is www.yadkinvalleybank.com. The information on our website does not constitute a part of, and is not incorporated by reference in, this prospectus. The Offering The following summary contains basic information about the shares of Common Stock and is not intended to be complete and does not contain all the information that is important to you. For a more complete understanding of the shares, you should read the section of this prospectus entitled Description of Capital Stock Common Stock. Issuer Yadkin Valley Financial Corporation Maximum number of shares of Common Stock offered by Selling Stockholder 678,566 shares of Common Stock, as described in Summary of the Underlying Transaction. Table of Contents The information in this prospectus is not complete and may be changed. Neither we nor the selling stockholder may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION: DATED JANUARY 18, 2013 PROSPECTUS 678,566 Shares of Common Stock This prospectus relates to the securities identified below that may be offered for sale from time to time by the person named in this prospectus (and its permitted transferees) identified under the heading Selling Stockholder on page 18 of this prospectus who currently owns such securities. Investing in our common stock involves risks. You should carefully consider all of the information set forth in this prospectus, including the risk factors on page 4 of this prospectus, as well as the risk factors and other information contained in any documents we incorporate by reference into this prospectus before investing in our common stock. See Information Incorporated by Reference. This prospectus covers 678,566 shares (the Shares ) of our common stock, $1.00 par value (the Common Stock ) previously issued to the Selling Stockholder as part of a private placement completed on December 26, 2012 (the 2012 Transaction ). The 678,566 shares of Common Stock were issued to the Selling Stockholder in exchange for 2,000 shares of the Company s Fixed Rate Cumulative Series T Perpetual Preferred Stock (the Series T Preferred Stock ) pursuant to the terms of the Share Exchange Agreement dated October 23, 2012 by and among us and the shareholders identified therein (the Share Exchange Agreement ). For a more detailed description of the 2012 Transaction, see Summary of the Underlying Transaction on page 7. We agreed in the Share Exchange Agreement to file this registration statement covering the Shares. The Selling Stockholder, who may sell or otherwise dispose of the Shares, is an initial investor in the 2012 Transaction described above. The Selling Stockholder may offer some or all of the Shares from time to time directly or through underwriters, broker-dealers or agents and in one or more public or private transactions and at fixed prices, at prevailing market prices, at prices related to prevailing market prices, at various prices determined at the time of sale or otherwise at negotiated prices. If the Shares are sold through underwriters, broker-dealers, or agents, the Selling Stockholder (or the purchasers of the Shares as negotiated with the Selling Stockholder) will be responsible for underwriting discounts or commissions or agent commissions, if any. The registration of the shares of Common Stock does not necessarily mean that any of the shares will be sold by the Selling Stockholder. The timing and amount of any sale is within the respective Selling Stockholder s sole discretion, subject to certain restrictions. See Plan of Distribution on page 27 of this prospectus. We will not receive any proceeds from the sale of Common Stock by the Selling Stockholder. Shares of our Common Stock are traded on the NASDAQ Global Select Market under the symbol YAVY . The closing sale price of our Common Stock as reported on the NASDAQ Global Select Market on January 14, 2013 was $3.00 per share. None of the Securities and Exchange Commission (the SEC ), the Federal Deposit Insurance Corporation (the FDIC ), the Board of Governors of the Federal Reserve System, any state or other securities commission or any other federal or state bank regulatory agency has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. The securities are not savings accounts, deposits, or other obligations of any bank, thrift or other depository institution and are not insured by the FDIC or any other governmental agency or instrumentality. The date of this prospectus is. Table of Contents SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus, including information included or incorporated by reference in this prospectus, contains statements which constitute forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and which statements are inherently subject to risks and uncertainties. These statements are based on many assumptions and estimates and are not guarantees of future performance. Forward looking statements are statements that include projections, predictions, expectations or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often characterized by the use of qualifying words (and their derivatives) such as may, would, could, should, will, expect, anticipate, predict, project, potential, continue, assume, believe, intend, plan, forecast, goal, estimate, or other statements concerning opinions or judgments of Yadkin , the Bank, and its management about future events. Factors that could influence the accuracy of such forward looking statements include, but are not limited to, the financial success or changing strategies of the Bank s customers or vendors, actions of government regulators, the level of market interest rates, and general economic conditions. Potential risks and uncertainties that could cause our actual results to differ materially from those anticipated in any forward-looking statements include, but are not limited to, the following: reduced earnings due to higher credit losses generally and specifically because losses in the sectors of our loan portfolio secured by real estate are greater than expected due to economic factors, including declining real estate values, increasing interest rates, increasing unemployment, or changes in payment behavior or other factors; reduced earnings due to higher credit losses because our loans are concentrated by loan type, industry segment, borrower type, or location of the borrower or collateral; the rate of delinquencies and amount of loans charged-off; the adequacy of the level of our allowance for loan losses and the amount of loan loss provisions required in future periods; results of examinations by our regulatory authorities, including the possibility that the regulatory authorities may, among other things, require us to increase our allowance for loan losses or writedown assets; the amount of our loan portfolio collateralized by real estate, and the weakness in the commercial real estate market; our efforts to raise capital or otherwise increase and maintain our regulatory capital ratios above the statutory and agreed upon minimums, including the impact of the proposed capital rules under Basel III; the impact of our efforts to raise capital on our financial position, liquidity, capital, and profitability; risks and uncertainties relating to not successfully negotiating and entering into definitive agreements with respect to, and closing the, currently contemplated asset dispositions and the asset sales or accelerated foreclosed properties dispositions not occurring within our currently expected ranges for price and other terms, and the pre-tax charges associated with such sales exceeding the pre-tax charges that we currently anticipate; the increase in the cost of capital of our Series T and Series T-ACB Preferred Stock in 2014 if we do not redeem within five years of the date of issuance; adverse changes in asset quality and resulting credit risk-related losses and expenses; Table of Contents Shares Outstanding as of January 14, 2013 41,186,646 shares of Common Stock Use of Proceeds All of the shares of Common Stock sold pursuant to this prospectus will be sold by the Selling Stockholder. We will not receive any of the proceeds from such sales.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001373707_tetraphase_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001373707_tetraphase_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001375796_telaria_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001375796_telaria_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes and the information set forth under the sections titled "Risk Factors," "Special Note Regarding Forward-Looking Statements," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in each case included in this prospectus. Unless the context otherwise requires, we use the terms "Tremor Video," "company," "our," "us," and "we" in this prospectus to refer to Tremor Video, Inc. and, where appropriate, our consolidated subsidiaries. Mission Our mission is to bring the certainty of science to the art of brand marketing. Our Company We are a leading provider of technology-driven video advertising solutions enabling brand advertisers to engage consumers across multiple internet-connected devices including computers, smartphones, tablets and connected TVs. Our clients include some of the largest brand advertisers in the world including all of the top 10 automakers and 9 of the top 10 consumer packaged goods companies. Our relationships with leading brand advertisers and their agencies have helped us create a robust online video ecosystem that includes more than 500 premium websites and mobile applications, over 200 of which partner with us on an exclusive basis. Our proprietary technology, VideoHub, analyzes in-stream video content, detects viewer and system attributes, and leverages our large repository of stored data to optimize video ad campaigns for brand-centric metrics. VideoHub also provides advertisers and agencies with advanced analytics and measurement tools enabling them to understand why, when and where viewers engage with their video ads. Online video advertising is amongst the fastest growing advertising formats in the United States. According to eMarketer, while overall advertising spend is expected to grow by 3.5% on a compounded annual basis between 2012 and 2016, online video advertising spend is expected to grow by 28.9%. eMarketer estimated total U.S. advertising spend in 2012 to be $165.8 billion, of which online video advertising spend was $2.9 billion, or only 1.7%. As online audiences continue to spend more time watching videos, online video advertising spend is projected to reach $8.0 billion in 2016. Within online video advertising, mobile video advertising spend is expected to grow from $244 million to $2.1 billion, reflecting a 71.1% compounded annual growth rate from 2012 to 2016. Despite this tremendous growth, several factors including audience and device fragmentation, inadequate brand-centric measurement and optimization technology, and lack of performance and placement transparency have made it challenging to effectively deliver online video advertising. Our technology is designed to address these challenges. Our VideoHub technology is the backbone of the Tremor Video Network through which we offer advertisers access to engaged consumers at scale in brand safe environments across multiple devices. We specialize in delivering in-stream video advertisements, which are served to viewers immediately prior to or during the publisher's content when viewers are most engaged. This is in contrast to traditional in-banner video advertising, which is served on the periphery of publisher content where viewers may not be directing their attention. We further enhance advertisers' campaigns with innovative ad formats specifically developed to harness the creative aspects of online video, which often result in consumers choosing to extend their interaction with a brand's message significantly past the original ad experience. To align our solutions with the goals of brand advertisers, we offer a number of brand performance-based pricing models for in-stream video advertising such as cost per engagement, or CPE, pricing where we are compensated only when viewers actively engage with advertisers' campaigns. Amendment No. 1 to FORM S-1 REGISTRATION STATEMENT Under The Securities Act of 1933 Table of Contents As a result, we enable our clients to effectively purchase measurable brand results rather than just impressions or clicks. We also license VideoHub technology to advertisers and their agencies through an intuitive and customizable console, which we call VideoHub for Advertisers, or VHA. We have developed strong relationships with brand advertisers and their agencies, who we believe view us as a strategic and trusted partner with a deep understanding of their industry-specific needs. We have also developed strong relationships with publishers due to our ability to provide consistent yield and monetization for their video content. We continuously evaluate and refine our publisher network to ensure that our advertisers have access to premium video inventory in brand safe environments. We believe these relationships have created a network effect whereby advertisers increase their spend with us because of the results we deliver utilizing our proprietary technology and our publishers' premium inventory, which in turn allows us to attract additional high quality publishers and thereby additional advertising spend. From 2011 to 2012, our revenue increased from $90.3 million to $105.2 million. This included an increase in revenue derived from the delivery of in-stream video advertising from $75.5 million to $99.7 million, or 32.1%. Additionally, over this period, our gross margin improved from 35.2% to 41.7%, driven in part by the adoption of our performance-based pricing models, while our net loss has decreased from $21.0 million to $16.6 million. For the three months ended March 31, 2013 as compared to the same period of 2012, our revenue increased from $17.3 million to $24.8 million, or 43.4%, our gross margin improved from 31.9% to 44.1% and our net loss decreased from $9.1 million to $5.2 million. For the three months ended March 31, 2012 and 2013, our revenue from the delivery of in-stream video advertising increased from $15.7 million to $24.0 million, or 52.9%. As a percentage of total revenue, revenue attributable to performance-based pricing for 2011, 2012 and the three months ended March 31, 2013 was 7.9%, 22.7% and 36.1%, respectively. Industry Background and Market Opportunity Advertisers often view the advertising market as a funnel that maps a potential consumer's purchase decision process from the moment he or she is introduced to a brand to the point of purchase. At the top of the marketing funnel, advertisers are focused on building brand awareness amongst the largest possible number of potential consumers and use reach as the primary metric to measure success. Traditionally, advertisers have preferred national television and outdoor media, such as a Super Bowl commercial or Times Square billboard, to achieve brand awareness. At the bottom of the marketing funnel, advertisers are focused on generating specific actions by a consumer in a short period of time. At this stage of the funnel, advertisers have generally relied on direct response marketing, such as newspaper inserts and coupons, as well as online search and display advertising, where conversions are used to measure campaign success. In the middle of the marketing funnel, advertisers seek to engage consumers and educate them about their brand in order to differentiate themselves from competitors and drive consumer preferences toward a particular branded product to influence future purchase decisions, which we refer to as brand lift. Historically, advertisers have sought to achieve middle of the funnel objectives through print, which can tell a deeper story about a product and its benefits, and allows the reader to linger as long as he or she likes, and to a lesser extent through local and cable television, which offers a more targeted audience for a product's message than national television. Traditional solutions for middle of the funnel marketing have significant limitations because they lack interactivity, the ability to measure and analyze the results of brand-centric ad campaigns in real-time and the ability to adjust campaigns in real-time to optimize for desired performance. We believe in-stream video is a highly effective channel for brand advertisers to meet their middle of the funnel objectives by combining the rich "sight, sound and motion" of television, the opt-in engagement of print and the real-time measurement and optimization capabilities of online. TREMOR VIDEO, INC. (Exact name of Registrant as specified in its charter) Table of Contents Several factors, including the availability of high-speed broadband and mobile network infrastructure, growth of internet-connected devices capable of video consumption, an increase in online video content and a behavioral shift towards online video viewing, are driving robust growth in online video consumption and creating a significant opportunity for in-stream video advertising. As a result, online video advertising is amongst the fastest growing advertising formats in the United States. Tremor Video Technology and Solutions VideoHub powers our video advertising solutions to effectively address the challenges faced by brand advertisers to achieve their middle of the funnel objectives. Through VideoHub we deliver: Brand-centric key performance indicators. We have developed a suite of brand-centric key performance indicators, or KPIs, such as engagement (i.e., the interaction of a viewer with a video ad), brand lift (i.e., a positive shift in preference towards a brand or branded product driven by exposure to a video ad and brand education), and time spent (i.e., the amount of time a viewer spends with a video ad), which are tailored to the needs of brand advertisers. Brand-centric optimization. Using a proprietary algorithm, VideoHub builds a decision tree that predicts performance of the video ad campaign for the chosen KPI based on its analysis of a series of attributes, which we call signals. VideoHub optimizes the campaign for the selected KPI by analyzing the signals of each ad request, such as video player size, geography, publisher, content category, length of video, browser type and viewer data, and prioritizing the delivery of ads that are more likely to perform. In-stream video analysis and categorization. VideoHub performs an analysis on every video stream and categorizes it among one of approximately 72 video content categories enabling us to further optimize a video ad campaign. Ad performance transparency. VideoHub offers advertisers transparency into the workings of its decision tree so that they can understand what signals are driving the performance of their video ad campaigns. Ad placement transparency. VideoHub tracks the number of impressions served to a specific publisher site and whether a video ad placement is fully, partially, or not visible to a viewer, which we refer to as viewability. With this functionality, advertisers know where an ad campaign is running and can validate that their video ads are viewable. Cross site and channel measurement. Our proprietary metric, eQ score+, allows advertisers to compare video inventory quality across different publisher sites by measuring attributes such as viewability, the size of the video player and ad completion rate. In addition, VideoHub provides advertisers and agencies access to metrics that measure audience reach and frequency of viewing by a particular audience, similar to what is used in the television industry, enabling them to compare the brand performance of their online and offline video ad campaigns. The Tremor Video Network offers advertisers access to premium video inventory at scale across multiple internet-connected devices in brand safe environments. Through the Tremor Video Network we deliver: Scale and reach across multiple devices. The Tremor Video Network delivers scale and reach across multiple internet-connected devices, including computers, smartphones, tablets, and connected TVs, enabling our clients to use our solutions to address their online video advertising needs across these devices. We have partnered with more than 500 premium websites and mobile applications, over 200 of which partner with us on an exclusive basis. Delaware 7311 20-5480343 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 53 West 23rd Street New York, New York 10010 (646) 723-5300 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Table of Contents Premium video content. We continuously evaluate and refine our publisher network to ensure that our advertisers have access to high performing content in a brand safe environment. Brand safety. Our technology prevents video ads from being served within content that is identified as objectionable for the brand advertiser, including content that contains accidents, distasteful or obscene language, substance abuse, violence, gambling, sex or crime. In-stream video focus. We specialize in delivering in-stream video advertisements, which can be served to viewers immediately prior to or during the publisher's content when they are most engaged. Advanced ad formats. Our proprietary ad formats give brand advertisers the ability to create a more engaging experience across multiple internet-connected devices, allowing viewers to explore content within the ad itself and learn more about the brand. Innovative pricing models. We offer innovative brand performance-based pricing for in-stream video advertising, such as CPE and cost per video completion, or CPVC, pricing where we are compensated only if the video is completed. We also license VideoHub technology, packaged with an intuitive and customizable user interface, to advertisers and their agencies through our VHA solution. Competitive Strengths Our key competitive strengths include: Differentiated and proprietary technology that analyzes in-stream video content, detects viewer and system signals and leverages our large repository of stored data to effectively optimize video ad campaigns for brand-centric metrics, while reducing operational complexity and cost. Our focus on innovation, which has allowed us to develop advanced ad formats, brand-centric performance-based pricing models, in-stream video analysis and categorization, and advanced analytical tools. Our strong multi-channel capabilities, which allow brand advertisers to deliver their video ad campaigns across multiple internet-connected devices. This alleviates their need to pursue an ad hoc approach with multiple providers. Strategic relationships with brand advertisers and their agencies that we serve through our highly experienced sales force and creative teams. Our clients include some of the largest brand advertisers in the world, including all of the top 10 automakers and 9 of the top 10 consumer packaged goods companies. A publisher network consisting of more than 500 premium websites and mobile applications, over 200 of which partner with us on an exclusive basis. Under our exclusive arrangements, the publishers' video inventory is only available through our sales force and our exclusive publishers' sales forces. A large repository of data generated from over 20 billion in-stream video ad impressions delivered through the Tremor Video Network. We leverage this data asset and the insights we have gained from the billions of video impressions we have previously delivered to continuously refine our algorithms and improve our optimization capabilities. William Day President and Chief Executive Officer Tremor Video, Inc. 53 West 23rd Street New York, New York 10010 (646) 723-5300 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Growth Strategy The key elements of our growth strategy are to: continue to develop innovative solutions that improve the transparency and enhance the effectiveness of online video advertising; attract new advertisers and agencies and increase our share of advertising budgets from existing advertisers and agencies, and encourage advertisers to adopt performance-based pricing models; increase our penetration in mobile, which includes smartphones and tablets, and connected TV; attract new premium publisher partners and enter into new exclusive relationships where appropriate across multiple devices; pursue high margin licensing opportunities; extend our technology to brand-focused, programmatic buying for online video advertising; and selectively expand our presence internationally. Risks Related to Our Business Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the section of this prospectus captioned "Risk Factors." These risks include, among others: The market in which we compete and our business model is continuing to develop, therefore our past operating results may not be indicative of future performance and our future operating results may fluctuate materially and may increase your investment risk. Unfavorable conditions in the global economy or reductions in digital advertising spend could limit our ability to grow our business and negatively affect our operating results. If we fail to adapt and respond effectively to rapidly changing technology and changing client needs, our solutions may become less competitive or obsolete. The market in which we participate is intensely competitive and fragmented, and we may not be able to compete successfully with our current or future competitors. We may not be able to maintain our access to premium advertising inventory, and our growth could be impeded if we fail to acquire new advertising inventory. If we are unable to protect our intellectual property rights or if it is alleged or determined that our solutions or another aspect of our business infringe the intellectual property rights of others, our business could be harmed. Corporate Information Tremor Video, Inc. was originally organized as Tremor Media, LLC in November 2005 and converted into a corporation named "Tremor Media, Inc." under the laws of the State of Delaware in September 2006. We changed our name to Tremor Video, Inc. in June 2011. Our principal executive office is located at 53 West 23rd Street, New York, New York 10010. Our telephone number is (646) 723-5300. Our website address is www.tremorvideo.com. Information contained in, or accessible through, our website does not constitute a part of, and is not incorporated into, this prospectus. The Tremor Video logo and names Tremor Video, Tremor Video Network, VideoHub, VideoHub for Advertisers, VHA, eQ score+ and other trademarks or service marks of Tremor Video, Inc. appearing in this prospectus are the property of Tremor Video, Inc. and its consolidated subsidiaries. This prospectus contains additional trade names, trademarks and service marks of others, which are the property of their respective owners. Copies to: Eric Jensen Nicole Brookshire Peyton Worley Cooley LLP 1114 Avenue of the Americas New York, New York 10036 Tel: (212) 479-6000 Adam Lichstein Senior Vice President, Chief Operating Officer and General Counsel 53 West 23rd Street New York, New York 10010 Tel: (646) 723-5300 Selim Day Michael Nordtvedt Wilson Sonsini Goodrich & Rosati Professional Corporation 1301 Avenue of the Americas New York, New York 10019 Tel: (212) 999-5800 Table of Contents The Offering Common stock offered by Tremor Video 7,500,000 shares Total common stock to be outstanding after this offering 48,498,103 shares Over-allotment option 1,125,000 shares Use of proceeds The principal purposes of this offering are to create a public market for our common stock and to facilitate our future access to the public equity markets, as well as to obtain additional capital. We intend to use the net proceeds from this offering for general corporate purposes. In addition, we may use a portion of the proceeds from this offering for acquisitions of complementary businesses, technologies or other assets, although we do not currently have any plans for any acquisitions. See the section of this prospectus titled "Use of Proceeds."
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. It does not contain all the information that may be important to you in making an investment decision. You should read this entire prospectus carefully, including the documents incorporated by reference herein and annexed hereto, which are described under Incorporation by Reference of Certain Documents, Where You Can Find Additional Information and Annex A: Financial Statements Relating to Legacy Dynegy. You should also carefully consider, among other things, the matters discussed in the section titled Risk Factors. In this prospectus, unless the context requires otherwise, references to the Company, the Issuer, we, our, or us refer to Dynegy and its consolidated subsidiaries, and references to our common stock refer to the common stock of Dynegy. Our Business We are a holding company and conduct substantially all of our business operations through our subsidiaries. Our primary business is the production and sale of electric energy, capacity and ancillary services from our fleet of sixteen operating power plants in six states totaling approximately 11,600 megawatts of generating capacity. This includes the Roseton and Danskammer facilities (the Facilities ) which the DNE Debtor Entities (as defined below) commenced an auction for in November 2012 (the Facilities Auction ) and the Oglesby and Stallings peaking facilities, which we intend to retire by the end of 2012, subject to a reliability assessment by the Midwest Independent Transmission System Operator, Inc. ( MISO ). Notice of the winning bids in the Facilities Auction was provided on December 10, 2012. We began operations in 1984 and became incorporated in the State of Delaware in 2007. We sell electric energy, capacity and ancillary services on a wholesale basis from our power generation facilities. Wholesale electricity customers will, for reliability reasons and to meet regulatory requirements, contract for rights to capacity from generating units. Ancillary services are the products of a power generation facility that support the transmission grid operation, follow real-time changes in load and provide emergency reserves for major changes to the balance of generation and load. We sell these products individually or in combination to our customers under short-, medium- and long-term agreements and hedging arrangements. We do business with a wide range of customers, including: regional transmission organizations ( RTOs ) and independent system operators ( ISOs ), integrated utilities, municipalities, electric cooperatives, transmission and distribution utilities, industrial customers, power marketers, financial participants such as banks and hedge funds, and other power generators. All of our products are sold on a wholesale basis for various lengths of time, from hourly to multi-year transactions. Some of our customers, such as municipalities or integrated utilities, purchase our products for resale in order to serve their retail, commercial and industrial customers. Other customers, such as some power marketers, may buy from us to serve their own wholesale or retail customers or as a hedge against power sales they have made. Recent Events Northeast Generation, Hudson, Roseton and Danskammer (together, the DNE Debtor Entities ) remain in chapter 11 bankruptcy and continue to operate their businesses as debtors-in-possession (the DNE Chapter 11 Cases ). Pursuant to the Settlement Agreement, certain proceeds of the sale of the Facilities (the Facilities Sale ) may be distributed to certain of the Former Creditors. In November 2012, the DNE Debtor Entities commenced an auction for the Facilities and notice of the winning bids was provided on December 10, 2012. On December 10, 2012, Danskammer entered into an asset purchase agreement (the Danksammer APA ) with ICS NY Holdings, LLC ( ICS ) pursuant to which Danskammer will sell to ICS the Danskammer power generation facility and associated real property (the Danskammer Sale ). At closing, Danskammer expects to receive $3.5 million in cash, which will be distributed pursuant to the applicable provisions in the DNE Debtor Entities Joint Plan of Liquidation (as defined below), and ICS will assume certain of Danskammer s liabilities as set forth in the Danskammer APA. On December 14, 2012, the DNE Debtor Entities filed the DNE Entities Joint Plan of Liquidation (the DNE Plan ) and a related disclosure statement (the DNE Disclosure Statement ) with the Bankruptcy Court. On December 17, 2012, Roseton filed with the Bankruptcy Court an agreed upon final form asset purchase agreement (the Roseton APA ) with LDH U.S. Asset Holdings LLC ( LDH Holdings ) pursuant to which Roseton will sell to LDH Holdings Roseton power generation facility and associated real property (the Roseton Sale and together with the Danskammer Sale, the Facilities Sale Transactions ). At closing, Roseton expects to receive $19.5 million in cash (subject to certain purchase price adjustments), which will be distributed pursuant to the applicable provisions in the DNE Debtor Entities Joint Plan of Liquidation, and LDH Holdings will assume certain of Roseton s, liabilities set forth in the Roseton APA. On December 26, 2012, the Bankruptcy Court entered an order approving the Facilities Sale Transactions. The consummation of the Facilities Sale Transactions remains subject to, among other things, required regulatory approval and closing conditions set forth in the Danskammer APA and Roseton APA, as applicable. On January 21, 2013, the DNE Debtor Entities filed an amendment to the DNE Plan and related DNE Disclosure Statement and on January 24, 2013 the Bankruptcy Court entered an order approving the DNE Plan and related DNE Disclosure Statement, as amended. If the Facilities Sale Transactions are not successful, the DNE Debtor Entities may be required to liquidate their remaining assets or convert the DNE Chapter 11 Cases to chapter 7 liquidation under the Bankruptcy Code. Table of Contents EXPLANATORY NOTE On November 7, 2011 Dynegy Holdings, LLC ( DH ), a wholly-owned subsidiary of Dynegy Inc. ( Dynegy ), and four of DH s wholly-owned subsidiaries, Dynegy Northeast Generation, Inc. ( Northeast Generation ), Hudson Power, L.L.C. ( Hudson ), Dynegy Danskammer, L.L.C. ( Danskammer ) and Dynegy Roseton, L.L.C. ( Roseton and, together with DH, Northeast Generation, Hudson and Danskammer, the DH Debtor Entities ) filed voluntary petitions for relief (the DH Chapter 11 Cases ) under chapter 11 of title 11 of the United States Code (the Bankruptcy Code ) in the United States Court for the Southern District of New York, Poughkeepsie Division (the Bankruptcy Court ). On July 6, 2012, Dynegy filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code in the Bankruptcy Court (the Dynegy Chapter 11 Case and, together with the DH Chapter 11 Cases, the Chapter 11 Cases ) as a necessary step in our reorganization. On July 12, 2012, Dynegy and DH, as co-plan proponents, filed the Joint Chapter 11 Plan of Reorganization for DH and Dynegy (the Plan ) with the Bankruptcy Court and on September 10, 2012, the Bankruptcy Court entered an order confirming the Plan (the Confirmation Order ). The Plan provided, among other things, for the merger of DH with and into Dynegy, with Dynegy as the surviving legal entity (the Merger ). On September 30, 2012, we completed the Merger. The accounting treatment of the Merger was reflected as a recapitalization of DH and, similar to a reverse merger, DH is the surviving accounting entity for financial reporting purposes. Therefore, our historical results for periods prior to the Merger are the same as DH s historical results; accordingly, for accounting purposes only, we refer to Dynegy as Legacy Dynegy for periods prior to the Merger. As a result of the accounting treatment of the Merger discussed above, the documents incorporated by reference into this registration statement and previously filed with the Securities and Exchange Commission (the SEC ) include the financial statements and other financial data of DH. In addition, please see Annex A hereto for certain financial statements of Dynegy relating to the DMG Transfer (as defined herein). The consolidated financial statements and related notes incorporated by reference herein and annexed hereto do not give effect to the Plan, including the impact of the adoption of fresh-start accounting, which was adopted upon our emergence from bankruptcy. Such adjustments will be reflected beginning October 1, 2012 in our consolidated financial statements that will be included in our Form 10-K for the year ending December 31, 2012. Please see Unaudited Pro Forma Condensed Consolidated Financial Statements herein for more information. The Plan became effective and Dynegy emerged from chapter 11 protection on October 1, 2012 (the date on which all conditions to effectiveness contemplated under the Plan were satisfied or waived, the Plan Effective Date ). On the Plan Effective Date and in accordance with the terms of the Plan, certain outstanding debt securities of DH (collectively, the DH Notes ), other financial obligations of Dynegy and DH, and the outstanding common stock of Dynegy (the Old Common Stock ) were cancelled. The holders of the DH Notes and certain other holders of claims against DH and Dynegy were characterized as holders of allowed general unsecured claims under the Plan (such holders, the Former Creditors ) and were entitled to receive distributions of our new common stock issued by us upon emergence, as well as a cash payment on the Plan Effective Date. Certain Former Creditors may also be entitled to a future cash distribution upon the sale of the Facilities (as defined herein). The former holders of the Old Common Stock, as the beneficiaries of Dynegy s administrative claim against DH under the Plan, were also entitled to receive distributions of our new common stock and five-year warrants to purchase shares of new common stock (the Warrants ), issued by us upon emergence. Table of Contents Our Corporate Information Our principal executive offices are located at 601 Travis, Suite 1400, Houston, Texas 77002. Our telephone number is (713) 507-6400 and we have a website accessible at www.dynegy.com. The information posted on our website is not incorporated into this prospectus and is not part of this prospectus. Table of Contents The information in this prospectus is not complete and may be changed. The selling stockholder may not sell these securities until the registration statement filed with the Securities and Exchange Commission relating to these securities is effective. This prospectus is not an offer to sell these securities and it is not a solicitation of an offer to buy these securities in any jurisdiction where such offer, solicitation or sale is not permitted. Subject to Completion, dated February 12, 2013 Dynegy Inc. 32,931,493 Shares Common Stock The selling stockholder is offering 32,931,493 shares of common stock, including 1,544,050 shares of common stock issuable upon the exercise of the Warrants issued pursuant to the Plan. We are not selling any shares of common stock under this prospectus. We will not receive any proceeds from the sale of shares to be offered by the selling stockholder. The common stock offered by this prospectus is being registered to permit the selling stockholder to sell the offered common stock from time to time. The selling stockholder may offer and sell the offered common stock at fixed prices, prevailing market prices at the times of sale, prices related to the prevailing market prices, varying prices determined at the times of sale or negotiated prices. The shares of our common stock offered by this prospectus and any prospectus supplement may be offered by the selling stockholder directly to investors or to or through underwriters, dealers or other agents. We do not know when or in what amounts the selling stockholder may offer these shares of common stock for sale. The selling stockholder may sell all, some or none of the shares of common stock offered by this prospectus. See Plan of Distribution on page 46 for a more complete description of how the offered common stock may be sold. Investing in our common stock involves risks. See Risk Factors beginning on page 9. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Our common stock is currently listed on the New York Stock Exchange, which we refer to as the NYSE, under the symbol DYN. On February 11, 2013, the last reported sale price on the NYSE of our common stock was $19.58. This prospectus is dated , 2013. Table of Contents
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+This summary highlights information contained in or incorporated by reference into this prospectus. This summary may not contain all of the information that you should consider before investing in our securities. You should carefully read this prospectus, including the documents incorporated by reference, which are described under the heading Incorporation of Certain Documents by Reference in this prospectus. All references in this prospectus to Atlantic Coast Financial Corporation, the company, we, us, our, or similar references refer to Atlantic Coast Financial Corporation and its subsidiaries on a consolidated basis, except where the context otherwise requires or as otherwise indicated. All references in this prospectus to Atlantic Coast Bank refer to Atlantic Coast Bank, the wholly-owned banking subsidiary of Atlantic Coast Financial Corporation. Our Company We are a thrift holding company headquartered in Jacksonville, Florida. Through our principal subsidiary Atlantic Coast Bank, a federally chartered thrift supervised by the Office of the Comptroller of the Currency, we serve the northeastern Florida and southeastern Georgia markets. Atlantic Coast Bank was originally established in 1939 as a credit union to serve the employees of the Atlantic Coast Line Railroad. In November 2000, Atlantic Coast Bank converted from a credit union to a federally chartered mutual savings bank. In February 2011, we were formed to serve as the sole stockholder and holding company of Atlantic Coast Bank following a conversion from a mutual holding company to a stock corporation. Atlantic Coast Bank has traditionally focused on attracting retail deposits and investing those funds in one- to four-family residential mortgage loans, home equity loans, commercial real estate loans and, to a lesser extent, automobile and consumer loans. Atlantic Coast Bank has also originated multi-family residential mortgage loans, commercial business loans and construction loans. Over the last five and a half years, our capital has been reduced significantly due primarily to credit losses directly resulting from the economic downturn that began in 2007. To reduce credit risk and preserve capital during the downturn, our management determined that it was in Atlantic Coast Bank s best interest to reduce or cease certain of our lending activities. These included the (i) 2007 change in our guidelines on one- to four-family and home equity lines and loans, followed by the cessation of home equity line originations in late 2008, (ii) 2008 cessation of land and development lending, (iii) 2009 cessation of lending on income-producing commercial real estate, and (iv) 2009 reduction in our one- to four-family lending originations, followed by the 2012 cessation of all such originations. Although this strategy did help us preserve capital and reduce our credit risk, it also led to a significant contraction in Atlantic Coast Bank s lending business. More recently, however, Atlantic Coast Bank has begun to stabilize its financial condition and with steps we have taken and plan to take, we believe that we are positioned to make a full recovery. This offering is part of a new business strategy to raise capital, change leadership through changes to our senior management and board of directors and re-enter and expand traditional lines of business. As the economy and demand for residential lending in our primary market area continue to improve, we plan to resume one- to four-family originations as well as home equity lending, with tightened credit qualifying standards. We also intend to reestablish our lending for income-producing commercial real estate, with higher credit qualifying standards in debt service coverage, contingent debt restrictions and loan-to-value ratios, as rental rates and values in our primary market area stabilize and cash flow from such rentals becomes more sustainable. In recent months, we have been able to improve our financial condition and preserve Atlantic Coast Bank s core franchise. Our net losses have continued to narrow, to $4.5 million in the first nine months of 2013, from $6.4 million and $6.3 million during the same periods in 2012 and 2011, respectively. As described in further detail below, our net losses for the first nine months of 2013 were negatively impacted by merger-related costs of $1.3 million, which costs will not continue. Our active management of non-performing loans, which have decreased to 3.49% of total portfolio loans at September 30, 2013, from 5.76% and 8.94% as of December 31, 2012 and 2011, respectively, has significantly contributed to the reduction in net losses. At September 30, 2013, we also had cash on hand and unpledged securities of $101.6 million to support our liquidity needs. We believe that additional capital raised in this offering combined with a new and experienced management team will allow us to grow our franchise and return to profitability. TABLE OF CONTENTS The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. TABLE OF CONTENTS Market Opportunity We believe that we are well positioned to take advantage of opportunities available in the markets we serve. We operate seven branches and one administrative office in the greater Jacksonville, Florida market and four branches in the southeastern Georgia market. In addition, we have a small business administration (SBA) lending office in Orlando, Florida, which makes small business loans in northeastern Florida, southeastern Georgia, South Carolina and North Carolina. As a result of the economic downturn and industry consolidation and acquisitions, we are one of the few remaining independent community-based financial institutions headquartered in northeastern Florida with leveragable scale and branch coverage. In addition, through our branch network in southeastern Georgia, we have a strong source of stable fee generating deposit accounts. The Jacksonville metropolitan statistical area (MSA), with deposits of $48 billion as of June 30, 2013, is the third largest market in Florida by deposits, with an above average compounded annual deposit growth rate of 7.6% from 2008 to 2013 compared to 3.2% for the state of Florida. Jacksonville has a diversified industry base with manufacturing, aerospace, information technology and life sciences as major industries. It is generally less dependent on tourism and lower-skill retail industries, and hence more resilient, than other areas in Florida. In addition, Jacksonville has the third largest military presence in the United States as the MSA is home to four major military facilities, further stabilizing the area s population and economy. Further, the Port of Jacksonville is the third largest port in Florida and the 17th largest port in the United States, and is currently the source of nearly 65,000 jobs. It is estimated that the Port of Jacksonville averages a $19 billion annual impact on the local economy, which is expected to increase with substantial planned growth upgrades to be implemented in 2015. Due to the Jacksonville MSA s improving economy, the unemployment rate has declined from 11.4% at its peak in January 2010 to 6.7% at August 31, 2013. The northeast Florida economy is trending up with single family home sales increasing from 12,586 in 2008, to 17,718 in 2012 and 21,884 on an annualized basis through September 30, 2013. Average median home prices have followed this upward trend increasing from $125,000 in December 2011 to $135,000 in December 2012 and $170,600 through September 30, 2013. The northeastern Florida banking market is dominated by three national banks that hold approximately 80% of the market share of deposits. There are very few community banks in this market with a critical mass of our asset size and branch office network. With the additional capital raised in this offering combined with a new and experienced management team, we believe we will have the opportunity to aggressively compete for commercial and small business loans and deposits as well as reemerge as a strong mortgage lender in an upward-trending residential market. Economic Downturn As the economic downturn began in 2007 and continued into mid-2009, our business incurred credit and other losses that collectively were significant and reduced our capital and weakened our financial condition. As a result, our management team took action to reduce our assets and change the mix of those assets in order to preserve capital and improve liquidity. Our non-performing loans increased from $7.8 million, or 1.1% of total portfolio loans, at December 31, 2007 to their peak of $46.6 million, or 8.9% of total portfolio loans, at December 31, 2011. We have experienced cumulative net losses of $67.8 million from 2008 through September 30, 2013. The deterioration in our financial condition also led to reduced sources of liquidity other than deposits, which caused Atlantic Coast Bank to maintain high levels of cash and investments in securities, rather than investing in higher yielding loans. Additionally, despite capital preservation actions, our total risk-based capital ratio and Tier 1 capital ratio fell from 12.1% and 7.7% at December 31, 2007, to 10.3% and 4.9% at September 30, 2013, respectively. As a result of the deterioration in our asset quality, operating performance and capital adequacy, on August 10, 2012, we entered into a Consent Order with Atlantic Coast Bank s primary banking regulator, the Office of the Comptroller of the Currency (the Consent Order), which required us, among other things to develop capital plans to achieve and maintain a total risk-based capital ratio that equals or exceeds 13.0% and a Tier 1 capital ratio that equals or exceeds 9.0% by December 31, 2012. Atlantic Coast Bank is not in compliance with these capital requirements as of September 30, 2013. TABLE OF CONTENTS The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED NOVEMBER 19, 2013 PRELIMINARY PROSPECTUS $42 million Atlantic Coast Financial Corporation Common Stock We are offering to sell $42 million of our common stock, par value $0.01 per share. Our common stock is listed on the Nasdaq Global Market under the symbol ACFC. On November 15, 2013, the last reported sale price for our common stock was $3.90 per share. Investing in our common stock involves substantial risks. You should carefully consider the matters discussed under the section entitled Risk Factors beginning on page 12 of this prospectus. These securities are not savings accounts, deposits or other obligations of a bank or savings association and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. None of the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, any state securities commission or any other state or federal bank regulatory agency has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus or the accompanying prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions 1 $ 2 $ Proceeds before expenses to us $ $ Net proceeds after estimated expenses to us $ $ (1) Please see Underwriting beginning on page 49 of this prospectus for additional information regarding the underwriting agreement. (2) Excludes up to $15.0 million to be purchased by certain of our officers, directors, insiders and existing shareholders pursuant to a directed share program, for which the underwriting discounts and commissions will be one percent (1%). See Underwriting Directed Share Program. We have granted the underwriters an option, exercisable within 30 days of the date of this prospectus, to purchase up to additional shares of our common stock at the initial public offering price, less the underwriting discounts and commissions, to cover over-allotments of shares of our common stock, if any. If the underwriters exercise the over-allotment option in full, then the estimated net proceeds to us will be $ . The underwriters expect to deliver the shares of our common stock to purchasers against payment on or about , 2013. FBR The date of this prospectus is , 2013. TABLE OF CONTENTS Recent Performance Trends For the third quarter of 2013, we reported a net loss of $0.9 million or $0.38 per diluted share compared with a net loss of $1.7 million or $0.66 per diluted share for the third quarter of 2012. For the first nine months of 2013, our net loss totaled $4.5 million or $1.81 per diluted share compared with a net loss of $6.4 million or $2.55 per diluted share for the first nine months of 2012. Our results for the first nine months of 2013 included $1.3 million in costs associated with our proposed merger with Bond Street Holdings, Inc., which failed to win approval of our stockholders at a June 11, 2013 special meeting. We believe that in order to more clearly assess our fundamental operations, it is appropriate to adjust our reported net losses for the first nine months of 2013 to exclude these merger-related costs. On this basis, our adjusted net loss for the first nine months of 2013 was $3.2 million or $1.29 per diluted share, respectively. Adjusted net loss is a non-GAAP measurements. See the reconciliation of GAAP and non-GAAP measures provided in Reconciliation of GAAP and Non-GAAP Measures. Significant developments in the third quarter included: Net loss decreased 44% to $0.9 million for the third quarter of 2013 from $1.7 million for the same quarter in 2012 and decreased 40% from $1.6 million for the second quarter of 2013. Adjusted net loss decreased 49% to $3.2 million for the nine months ended September 30, 2013, from $6.4 million for the nine months ended September 30, 2012. Non-performing assets decreased 27% to $25.1 million or 3.51% of total assets at September 30, 2013, from $34.2 million or 4.35% of total assets at September 30, 2012, and decreased 1% from $25.2 million or 3.40% of total assets at June 30, 2013. Annualized net charge-offs to average loans decreased to 1.87% for the third quarter of 2013 from 2.78% for the year-earlier third quarter and increased from 1.79% in the second quarter of 2013. The table below illustrates the trend of improved credit quality from December 31, 2008 through September 30, 2013: At September 30, 2013 At December 31, 2012 2011 2010 2009 2008 (dollars in thousands) Non-performing Loans (NPLs) $ 13,603 $ 24,884 $ 46,615 $ 28,125 $ 35,150 $ 25,535 Real Estate Owned 11,472 8,065 5,839 9,940 5,028 3,332 Classified Loans 24,728 37,405 59,321 33,573 42,037 29,916 Allowance for Loan Losses (ALLL) 9,522 10,889 15,526 13,344 13,810 10,598 % of ALLL to NPLs 70.00 % 43.76 % 33.31 % 47.45 % 39.29 % 41.50 % % of ALLL to Classified Loans 38.51 % 29.11 % 29.03 % 39.75 % 32.85 % 35.43 % Turnaround Plan We have begun developing and implementing a recovery plan to grow our business, increase liquidity, bolster capital, decrease cost of funds and return to profitability. We believe these actions will allow us to revitalize Atlantic Coast Bank and to aggressively compete in our northeastern Florida and southeastern Georgia markets. The key elements of our plan are: Raising capital through this public offering; Implementing new leadership, beginning with the hiring of a new Chief Executive Officer and making changes and additions to our board of directors; Continue to improve our asset quality; and Reentering historical lines of business and expanding our lending platform. Changes in Senior Management and our Board of Directors On September 10, 2013, we announced our decision to name John K. Stephens, Jr. as our next Chief Executive Officer and President, and a director, and on September 23, 2013, our board of directors appointed TABLE OF CONTENTS James D. Hogan as our Chief Financial Officer and a director. The appointment of Mr. Hogan is contingent upon receipt of regulatory non-objection from the Office of the Comptroller of the Currency and the Federal Reserve Bank of Atlanta. John K. Stephens, 50. Mr. Stephens is a 23-year veteran of the banking and financial services industry. From 2006 to 2011, he served as chief lending officer for the Central and North Florida operations of Fifth Third Bank, N.A., overseeing a loan portfolio of almost $2 billion and responsible for strategic leadership for all wholesale banking activities in that market area. Mr. Stephens began his career in 1986 with Wachovia Bank, N.A., where he started as a regional banking officer, later became a relationship manager responsible for originating and managing senior debt and ancillary service relationships with corporate clients, and was ultimately selected to start and lead a leveraged finance group. From 2011 to September 2013, Mr. Stephens served as President of Orlando, Florida-based Tower Bridge Capital, Inc., a privately held mezzanine debt and strategic advisory firm focused on emerging growth companies. Mr. Stephens received an MBA, with a concentration in corporate finance and capital markets, from the University of Notre Dame, Mendoza Graduate School of Business, and earned a Bachelor of Arts degree from the University of South Carolina. Mr. Stephens brings significant and varied banking experience to our company, including work within our northeastern Florida market, and is well-positioned to lead us towards the goal of building a well-capitalized and profitable community bank. James D. Hogan, 69. Mr. Hogan most recently served as Executive Vice President and Chief Financial Officer of Customers Bancorp, Inc. from October 2012 to August 2013, and as Customers Bank s Executive Vice President and Director of Enterprise Risk Management from June 2010 to October 2012. From May 2005 to June 2010, Mr. Hogan was retired and did some private consulting. From April 2001 to May 2005, Mr. Hogan was Chief Financial Officer and Executive Vice President of Sovereign Bancorp, Inc. Prior to Sovereign, he was Executive Vice President and Corporate Controller of Firstar Bancorp (now US Bancorp) from October 1987 through April 2001. Mr. Hogan passed the CPA examination in 1970 and kept an active license as a Certified Public Accountant through 2005. From 1970 through 1976 he was a bank audit specialist with Coopers and Lybrand and was the Controller of The Idaho First National Bank (West One Bank) from 1976 through 1987. Mr. Hogan graduated from Miami University in 1970 with a B.S. in Accounting. Mr. Hogan s extensive and lengthy experience in the banking industry as a chief financial officer as well as in the risk management and audit related areas will provide significant value to the board. Effective October 21, 2013, when the resignation of our Interim President, Chief Executive Officer and Chief Financial Officer, Thomas B. Wagers, Sr., became effective, Marshall D. Stone, age 58, who had served as the Controller of the Company and the Bank since 2003, became our Interim Principal Accounting Officer. In addition to Mr. Stephens and Mr. Hogan, we have added three new members to our board of directors to replace three members of the board who decided not to stand for re-election at our 2013 annual meeting: Kevin G. Champagne, 63. Mr. Champagne, who has been named Chairman of our board of directors, is currently retired, and began his career in 1971 with New Bedford Five Cent s Savings Bank, which changed its name to Seacoast Financial Services Corporation ( Seacoast ), in New Bedford, Massachusetts, in the Management Training Program. Mr. Champagne advanced through the bank, culminating in being appointed the President and Chief Executive Officer of Seacoast in 1994. Mr. Champagne tenure as President and Chief Executive Officer of Seacoast included achieving growth through acquisitions, successful completion of an Initial Public Offering together with a mutual to stock conversion, improving profitability and increasing stockholder dividends, as well as the ultimate sale of Seacoast to Sovereign Bancorp in 2004. Mr. Champagne also served on Sovereign Bank s Board of Directors until 2007. Mr. Champagne brings extensive expertise in banking, serving as senior management and on a board of directors and growing a successful bank. John J. Dolan, 56. Mr. Dolan, who has been named Vice Chairman of our board of directors is currently retired, and was employed by First Commonwealth Financial Corporation, and its predecessor, headquartered in Indiana, Pennsylvania, from 1980 until 2011. He most recently served as the President and Chief Executive Officer, after serving the company, and its predecessor, as TABLE OF CONTENTS Chief Financial Officer for 20 years. He helped transform First Commonwealth Financial Corporation from a bank with $200 million in assets to a publicly traded bank holding company with $6 billion in assets. Mr. Dolan brings extensive experience as the strategic and financial leader of a community bank, including raising capital, the development of executive management, and achieving growth through acquisitions. Dave Bhasin, 62. Mr. Bhasin is Chief Executive Officer of D.B. Concepts, a privately-held company that operates franchised restaurants with locations throughout eastern Pennsylvania. Prior to starting D.B. Concepts, Mr. Bhasin held various technology and business management positions with Air Products & Chemicals, Inc. and International Business Machines Corporation. Mr. Bhasin s extensive business background will provide valuable insight and perspective to our board of directors. Implementation of Revised Business Strategy As a result of the economic downturn and industry consolidation and acquisitions, we are one of the few remaining independent community-based financial institutions headquartered in northeastern Florida with leveragable scale and branch coverage. We believe that, with appropriate capital levels, we will be well-positioned to take advantage of the opportunities available in our markets. Upon the successful completion of this offering and the increase in Atlantic Coast Bank s capital by an estimated $39.2 million, we intend to take immediate action to deal with the financial uncertainty related to our non-performing assets and return to our community and mortgage banking roots. We also intend to reinforce our efforts in the business banking market by recruiting talented lenders to serve a small business market which we believe is largely underserved by large national and regional banks. We also believe that there continues to be significant potential to expand our warehouse lending division, which we started in 2009 but has not been in a position to grow to its full potential due to Atlantic Coast Bank s capital and liquidity constraints. We anticipate that the growth momentum we have in our SBA lending division will continue and with the creation of new business deposit products, it can be a source of new low cost deposits. Until our mortgage banking and small business lending units are fully built out, we intend, for the short term, to supplement our originated loans with the purchase of select agency-qualifying and jumbo mortgages, as well as other types of loans that meet our credit quality standards and are in industries and local markets familiar to our management. Manage Non-Performing Assets. We have continued to aggressively manage our non-performing assets. As a result, non-performing assets have declined steadily over the last 18 months. At September 30, 2013, we had $13.6 million of non-performing loans and $11.5 million of owned real estate (OREO), for an aggregate of $25.1 million of non-performing assets. In the normal course of our business, we look to manage non-performing assets through the method which results in the highest recovery for us. Current strategies we employ to manage non-performing assets include, but are not limited to, the workout of non-performing assets through foreclosure and sale of collateral, deed-in-lieu, loan restructures, and note sales to third parties. To date, we have generally resolved non-performing loans and disposed of OREO on an individual asset basis. Our allowance for loan losses and the carrying value of collateral dependent loans and OREO reflect our current expectation for resolution or disposition. As part of our ongoing management of non-performing assets, we regularly evaluate the portfolio and individual assets to determine the least costly method of disposal. This evaluation periodically includes conversations with potential acquirers of distressed assets on a whole-loan or pool basis. Following the rejection of the proposed merger with Bond Street Holdings, Inc. by our stockholders at our June 11, 2013 special meeting, our board of directors immediately began to evaluate alternatives to raise capital in the near term. As part of this evaluation, and after consultation with our financial advisors, we identified a bulk sale of non-performing assets as a possible strategy that could be pursued to improve our financial position if we were successful in our capital raising efforts. The successful completion of this offering and receipt of the net proceeds described in Use of Proceeds would increase our regulatory capital to a level that would enable us to consider the disposition of the majority of our non-performing assets in bulk sales. This could reduce the significant ongoing costs and efforts needed to resolve non-performing assets through our usual loan workout and foreclosure disposition process, while still maintaining our regulatory capital ratios at levels that are compliant TABLE OF CONTENTS with the Consent Order. We believe such a reduction in non-performing assets would also enable management and our board of directors to focus on carrying out our new business strategy. Based on our management team s limited due diligence and preliminary indications of value from third party brokers, management has estimated a possible bulk sale value of certain assets. If all the assets we obtained preliminary indications of value on were sold at the prices currently estimated by the brokers, we believe we would have dispositions with a book value between $19 million and $20 million and the range of loss on the dispositions would be from $6.3 million to $8.6 million, reducing our ratio of non-performing assets to total assets to approximately 1% by March 31, 2014. However, as of the date hereof, we have not received any letters of intent or firm bids with respect to the any of the non-performing assets, and the estimates are based upon the sales of a sample group of loans which would likely change prior to the execution of the sale, should it occur. Therefore these estimated losses reflect only our management team s current estimates based on their prior experience and current market assumptions and on our discussions with potential acquirers of these assets. Any loss on disposition of assets could have a significant impact on us by increasing our net operating losses, thereby decreasing our equity and negatively impacting our regulatory capital ratios. Additionally, the potential loss on a bulk sale disposition of assets would likely be greater because such methods of disposition typically occur at substantial discounts to individual disposition methods. Our non-performing loans are comprised primarily of residential mortgages and commercial real estate loans, which totaled $8.2 million and $2.3 million, respectively, as of September 30, 2013. Residential mortgages are generally measured for impairment in the aggregate under ASC 450, with charge-offs being applied to individual loans at the time the loans become non-performing, typically 90 days past due. Commercial real estate loans are measured for impairment individually under ASC 310-10-35-22, and related paragraphs. In addition to residential mortgages and commercial real estate loans, our non-performing loan portfolio consists of consumer loans, home equity loans, other commercial loans, and land and multi-family loans, which totaled $1.0 million, $0.8 million, $0.8 million, and $0.5 million, respectively, as of September 30, 2013, since we have not made a definitive decision to sell these loans and will not be able to make such a decision until a successful capital raise is completed, the mix of loans that might be subject to a bulk sale has not yet been determined. Therefore, none of our loans have been valued assuming a bulk sale, and rather have been valued based on our current intentions for individual disposition. However, if we do come to a definitive decision to sell these loans, we currently believe that the loans sold would consist primarily of residential mortgages and commercial real estate loans. In addition, regardless of what loans are included in a possible bulk sale, approximately 95% of our current non-performing portfolio is collateral dependent. Therefore we would estimate that approximately 95% of the loans included in any bulk sale would be collateral dependent. Assuming the completion of this offering, we believe our capital ratios would allow us to meet or exceed the capital requirements mandated by the Consent Order. The below table sets forth our September 30, 2013 regulatory capital ratios on an actual basis and on an as adjusted basis to give effect to this offering. At September 30, 2013 Actual At September 30, 2013 As Adjusted 1 Total capital (to risk weighted assets) 10.30 % 19.34 % Tier 1 capital (to risk weighted assets) 9.04 % 18.13 % Tier 1 capital (to adjusted assets) 4.88 % 9.78 % Tangible common equity (to tangible assets) 4.18 % 9.17 % (1) Assumes net proceeds to us of $39.2 million in this offering and no shares are sold pursuant to our directed share program. In the event we are able to complete a disposition of non-performing assets, in addition to completing this offering with net proceeds to us of $39.2 million, our total risk-based capital ratio and Tier 1 capital ratio would be 18.99% and 9.33%, respectively. In addition, our Tier 1 capital (to risk weighted assets) and tangible common equity (to tangible assets) ratios would be 17.74% and 8.70%, respectively. These calculations assume a loss of $7.4 million on such a disposition of non-performing assets (reflecting the approximate midpoint of the estimated loss range), and also assume that the loss of $7.4 million will include a $3.6 million charge-off against current reserves for non-performing loans. TABLE OF CONTENTS Our ability to formally pursue a sale of these non-performing assets in a bulk sale is dependent on our ability to raise a sufficient amount of capital that would allow us to meet the capital requirements mandated by the Consent Order and the receipt of regulatory non-objection to pursue a bulk sale strategy as described herein. In the event this offering is not successful, the negative impact to our current capital levels that would result from a bulk sale would be too great in view of the Consent Order s capital requirements, and we believe it is likely that our primary regulators would not consent to such a sale. Under the Consent Order, we must receive non-objection from our primary regulators prior to making material changes to our business plan. Based upon management s discussions with our primary regulators, we believe that, unless this offering is successful, a bulk sale of this nature would likely not receive regulatory non-objection due to the material impact it would have on our current capital levels. Therefore, unless we complete this offering and receive the net proceeds described in Use of Proceeds, we would not pursue a bulk sale. If this offering is successful, management believes that the necessary regulatory non-objection would be granted, although there can be no assurances of that. In the absence of the increased capital base we would achieve through a successful offering, we intend to continue to manage our balance sheet in general, including our non-performing assets, in a manner consistent with our current practices. We would attempt to maximize our proceeds from the disposal of non-performing assets through the workout of those assets by foreclosure and sale of collateral, deed-in-lieu, and loan restructures, note sales to third parties, and other methods which would result in the least costly method of disposal. Circumstances impacting the determination of the least costly method of disposal include current market conditions, condition of collateral, carrying costs (including taxes, insurance, receivership, and collateral protection), legal expenses, and other costs required to manage the assets. We are not currently aware of any conditions in which we would be economically compelled to sell non-performing loans, and even if we were so compelled, any such sale would be subject to the receipt of regulatory non-objection. Reenter Mortgage Banking. We intend to reenter the business of originating one- to four-family residential loans for investment or for sale. Due to operating and expense issues, we shut down our internal mortgage origination division in late 2012, and moved to a referral model. After significant analysis and study, we believe that substantial opportunities exist in our markets for reentering the mortgage origination business. Although nationally there has been a decrease in refinancing activity, the real estate recovery in Florida is continuing and represents opportunities for significant growth. Small Business Banking. We believe providing loans and other banking services to small businesses represents a significant opportunity for growth in our market, which is dominated by three national banks that have approximately 80% of the market share. Since many of the community banks in our markets have been weakened or shut-down over the last five years, we believe that the banking needs of many small businesses are being overlooked. We intend to create a team of experienced small business lenders with a goal of becoming the small business lending leader in our markets through the delivery of commercial and commercial real estate loans to what we believe is an underserved market. We intend to expand relationships with business loan customers through the sale of innovative cash management products priced for small businesses. Warehouse Lending and SBA Lending. We will use the new capital raised in this offering to continue to expand our warehouse lending and SBA lending activities. Since 2009, when we first entered the warehouse lending business, we experienced steady growth in our warehouse lending business and we currently have annualized production of approximately $1.0 billion resulting in average outstanding balances of $43.9 million. The average yield on warehouse loans in 2013 is 5.04%. We entered the SBA lending business in late 2010 and have quickly become a local market leader with annualized sales of $7.0 million resulting in annualized gains of $0.8 million. The growth in both lines of business has been constrained due to our capital and liquidity issues. We believe that both warehouse and SBA lending are very profitable and, with the proper level of capital, expect these lines of business to experience significant growth. Our warehouse lending programs are considered lines of credit to third-party originators collateralized by mortgages, and as such, are structured as financing arrangements under ASC 860. These loans are always paid-off at their par value, and the gain on the sale of the mortgages is income for the third-party originator. It is our policy to classify warehouse loans as held-for-investment, with a 100% risk weighted asset classification TABLE OF CONTENTS for regulatory capital purposes. This is a departure from our treatment of warehouse loans at and prior to December 31, 2012, when we reported such loans as held-for-sale, and also from our treatment at and prior to September 30, 2012, when warehouse loans were classified as 50% risk weighted assets for regulatory capital purposes. These changes did not have a material impact on the calculation of our regulatory capital ratios. Operating Expenses. We intend to continue to aggressively manage our operating expenses. Aside from new costs associated with loan growth, operating expenses are expected to decline significantly as we dispose of our non-performing assets and continue to see decreases in the rate of new non-performing loans. In 2012 non-interest expense totaled $23.4 million, and we incurred $2.7 million in collection expense and repossessed asset losses. Non-interest expense for the nine months ended September 30, 2013 was $18.1 million, inclusive of $1.3 million from merger-related expenses, and included $1.6 million of collection expense and repossessed asset losses. Besides reduced collection costs, we expect compliance with the capital requirements of the Consent Order will, lead to significant reductions in risk related costs, such as FDIC and other insurance costs, and outside professional expenses. Credit and Funding Costs. Following the successful completion of this offering, our credit costs are expected to decline as Atlantic Coast Bank executes on plans to dispose of non-performing assets to reach a level of approximately 1% of assets by March 31, 2014. In addition, Atlantic Coast Bank has a high cost of funds due to approximately $203 million in debt which has a weighted average interest rate of 4.61% as compared to its deposit cost of 0.69%. As of September 30, 2013, this debt was comprised of advances totaling $110 million from the Federal Home Loan Bank of Atlanta ( FHLB ), collateralized by loans, investment securities and cash of $121.4 million, and $92.8 million of structured notes under reverse repurchase agreements with two counterparties collateralized by investment securities of $117.7 million. The debt matures as follows: Amount Maturing Securities Sold Under Agreements to Repurchase FHLB Advances Total (Dollars in thousands) 2013 $ $ $ 2014 26,500 26,500 2015 10,000 20,000 30,000 2016 5,000 20,000 25,000 2017 25,000 65,000 90,000 Thereafter 26,300 5,000 31,300 Total $ 92,800 $ 110,000 $ 202,800 As the debt begins to mature beginning in 2014, our net interest margin should improve dramatically through 2017 as these funds are replaced with much less costly deposits Atlantic Coast Bank acquires from our retail network using promotions and other attractive product offerings that we have successfully used to replace maturing broker deposits over the last two years. We also may supplement these deposits, if needed, with certificates of deposit sourced through a well-known national non-broker internet deposit program. We have successfully utilized the national non-broker internet deposit program in the past. As of September 30, 2013 the prepayment penalties for the FHLB advances and the reverse repurchase agreements were $11.5 million and $11.2 million, respectively. TABLE OF CONTENTS Reconciliation of GAAP and Non-GAAP Measures The following table provides a reconciliation of net loss and loss per diluted share in accordance with GAAP to adjusted net loss and adjusted loss per diluted share, both non-GAAP measures, in accordance with applicable regulatory requirements. We provide non-GAAP earnings information to improve the comparability of our results and provide additional insight into our results. Three Months Ended Nine Months Ended September 30, 2013 June 30, 2013 September 30, 2012 September 30, 2013 September 30, 2012 (Dollars in thousands, except per share amounts) Non-interest expense as reported $ 5,026 $ 6,247 $ 5,590 $ 18,130 $ 16,970 Less merger-related costs 1,137 1,294 Adjusted non-interest expense $ 5,026 $ 5,110 $ 5,590 $ 16,836 $ 16,970 Net loss as reported $ (929 ) $ (1,554 ) $ (1,669 ) $ (4,522 ) $ (6,374 ) Less merger-related costs 1,137 1,294 Adjusted net loss $ (929 ) $ (417 ) $ (1,669 ) $ (3,228 ) $ (6,374 ) Loss per diluted share as reported $ (0.38 ) $ (0.62 ) $ (0.66 ) $ (1.81 ) $ (2.55 ) Less merger related costs 0.45 0.52 Adjusted loss per diluted share $ (0.38 ) $ (0.17 ) $ (0.66 ) $ (1.29 ) $ (2.55 ) Efficiency ratio as reported 93.37 % 105.67 % 75.03 % 104.51 % 78.96 % Effect of merger-related costs % 19.23 % 7.46 % Adjusted efficiency ratio 93.37 % 86.44 % 75.03 % 97.05 % 78.96 % TABLE OF CONTENTS The Offering Common Stock offered by us shares ( shares if the underwriters option to purchase additional shares is exercised in full). Common Stock to be outstanding after this offering shares ( shares if the underwriters option to purchase additional shares is exercised in full). Use of proceeds We intend to use the net proceeds of this offering for general corporate purposes, including contributing substantially all of the net proceeds of the offering to Atlantic Coast Bank to maintain capital ratios at required levels and to support growth in Atlantic Coast Bank s loan and investment portfolios. See Use of Proceeds. Dividend policy We have not paid dividends to our common stockholders since July 2009 and do not currently intend to pay dividends. Our ability to pay dividends is limited by the Supervisory Agreement (Supervisory Agreement) with the Board of Governors of the Federal Reserve System (FRB). Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend upon a number of factors, including our regulatory compliance status, earnings and financial condition, liquidity and capital requirements, the general economic and regulatory climate and other factors deemed relevant by our board of directors. See Dividend Policy. Nasdaq Global Market Symbol ACFC Ownership restrictions Because we are a thrift holding company, a holder of shares of our common stock (or group of holders acting in concert) that (a) directly or indirectly owns, controls or has the power to vote more than 5% of the total voting power of the company, (b) directly or indirectly owns, controls or has the power to vote 10% or more of any class of voting securities of the company, (c) directly or indirectly owns, controls or has the power to vote 25% or more of the total equity of the company, or (d) is otherwise deemed to control the company through control of the company s management and policies or otherwise under applicable regulatory standards, may be subject to important restrictions, such as prior regulatory notice or approval requirements and applicable provisions of the Federal Deposit Insurance Corporation (FDIC) Statement of Policy on Qualifications for Failed Bank Acquisitions. In addition, the FRB regulations provide that for a period of three years following the date of the completion of our February 2011 second step conversion, no person, acting singly or together with associates in a group of persons acting in concert, may directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of a class of our equity securities without the prior written approval of the FRB. Further, our articles of incorporation provide that in no event will any person who beneficially owns more than 10% of the then-outstanding shares of common stock, be entitled or TABLE OF CONTENTS permitted to vote any of the shares of common stock held in excess of the 10% limit, unless, prior to acquiring beneficial ownership of such shares in excess of the 10% limit, such acquisition was approved by a majority of the unaffiliated directors (as defined in our articles of incorporation).
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. References to the Company, we, us, our and similar words refer to PuraMed Bioscience Inc. PURAMED BIOSCIENCE INC. Background PuraMed BioScience, Inc. ( PuraMed or the Company ) was incorporated in Minnesota on May 9, 2006 as a wholly-owned subsidiary of Wind Energy America, Inc. (formerly Dotronix, Inc. ) for the purpose of engaging in the business of developing and marketing non-prescription over-the-counter healthcare products to remedy various ailments. In late 2006, PuraMed s former parent company decided to spin off its PuraMed subsidiary and related healthcare products business. Accordingly, on April 12, 2007, Wind Energy America, Inc. affected a spin-off of PuraMed to shareholders of Wind Energy America, Inc. on a pro rata dividend basis of one common share of PuraMed for each five common shares of Wind Energy America, Inc. Since the April 12, 2007 effective date of the spin-off, PuraMed and Wind Energy America, Inc. have operated separately, with their respective managements, businesses, assets and capital structures being completely independent from each other. Detailed information regarding this spin-off of PuraMed from Wind Energy America, Inc. (formerly Dotronix, Inc.) is contained in a Form 8-K and exhibit thereto which were filed with the SEC on April 10, 2007, and can be readily accessed at the SEC website www.sec.gov. Overview of Business The Company is engaged in the business of developing and marketing a line of non-prescription medicinal or healthcare products to be marketed through various retail channels under the LipiGesic brand and trademark. In an effort to add continuity to all of PuraMed s products, the Company trademarked the brand name LipiGesic . The Company has recently completed all product development and design packaging for our initial three products, LipiGesic M (Migraine), LipiGesic H (Tension Headache) and LipiGesic PM (Insomnia). The Company entered the Over-The-Counter (OTC) healthcare products marketplace in December 2009, by employing direct to consumer marketing for our migraine remedy via television commercials and print articles. The Company is currently undergoing substantial activities to gain broad retail distribution through mainstream drug store chains, mass merchandisers, and food chains. The Company has gained a retail presence in two of the top national chain drug stores, Walgreens and CVS. The number of stores now stocking our LipiGesic M migraine product is approaching 15,000 stores. The Company is also in negotiations with several additional large retailers to stock our LipiGesic M, migraine product. PuraMed is now implementing our marketing campaign utilizing our successful clinical study. The Company is executing our marketing campaign utilizing our clinical trials to overcome consumer and retailer skepticism and provide third party validation of our migraine products efficacy. In addition, the Company has begun a second clinical study that focuses specifically on children and adolescents. The Company s overall marketing efforts will have a strong consumer emphasis including a social marketing campaign, medical community detailing and sampling, continuing medical education (CME) program for doctors and pharmacists, medical conference participation and celebrity endorsements. The Company also intends to continue to develop and grow our intellectual property portfolio, which is expected to substantially enhance shareholder value. Our scientific team has gained significant and exciting evidence from our initial research and management, which we expect will assist us in the development of a new generation of botanically derived anti-inflammatory and pain management products with broad applications. Our common stock is quoted on the OTCBB under the symbol PMBS. On February 7, 2013, the closing price of our common stock was $0.09 per share. Our executive offices are located at 1326 Schofield Avenue, Schofield, WI 54476, and our telephone number at such office is (715) 359-6373. Recent Developments None About This Offering This offering relates to the resale of up to 7,000,000 shares of our common stock, which are the Shares that we will put to TCA pursuant to the Equity Agreement. The 7,000,000 shares included in this prospectus represent a portion of the aggregate shares issuable to the Selling Security Holder under the Equity Agreement. Pursuant to the Equity Agreement: TCA agreed to purchase from the Company, from time to time, in the Company s discretion (subject to the conditions set forth therein), for a period of twenty-four (24) months, commencing on the effective date of the registration statement filed by the Company for resale of the Shares issuable under the Purchase Agreement, up to $2,000,000 of the Company s common stock; Pursuant to a registration rights agreement between the Company and TCA entered into in connection with the Equity Agreement, the Company agreed to file a registration statement with the U.S. Securities and Exchange Commission (the SEC ) for the resale of not less than the maximum number of shares of common stock allowable pursuant to Rule 415 under the Securities Act, of shares of common stock issuable under the Equity Agreement; The purchase price for the shares of common stock sold under the Equity Agreement will be equal to ninety-five percent (95%) of the lowest daily volume weighted average price of the Company s common stock for the five (5) consecutive trading days (the Pricing Period ) after the Company delivers to TCA an Advance notice in writing (the Market Price ) requiring TCA to advance funds to the Company, subject to the terms of the Equity Agreement. The maximum amount of common stock that TCA shall be obligated to purchase with respect to any single Advance under the Equity Agreement will be the greater of: (i) an amount calculated by multiplying the Market Price applicable to the relevant Advance notice by 200,000 shares or (ii) two hundred percent (200%) of the average daily volume of shares of common stock traded during the immediately preceding five (5) consecutive trading days applicable to the relevant Advance notice. As further consideration for TCA entering into and structuring the equity facility, the Company shall pay to TCA a fee by issuing to TCA that number of shares of the Company s common stock that equal a dollar amount of one hundred and fifteen thousand dollars ($115,000) (the Facility Fee Shares ). It is the intention of the Company and TCA that the value of the Facility Fee Shares shall equal $115,000. In the event the value of the Facility Fee Shares issued to TCA does not equal $115,000 after a ninth month evaluation date, the Equity Agreement provides for an adjustment provision allowing for necessary action to adjust the number of shares issued. In addition to the Facility Fee Shares, the Company shall pay to TCA a one-time administrative fee of $12,500 and a one-time due diligence fee of $10,000. We relied on an exemption from the registration requirements of the Securities Act. The transaction does not involve a private offering, TCA is an accredited investor and/or qualified institutional buyer and TCA has access to information about the Company and its investment. At an assumed purchase price under the Purchase Agreement of $0.0855 (equal to 95% of the closing price of our common stock of $0.09 on February7, 2013), we will be able to receive up to $598,500 in gross proceeds, assuming the sale of the entire 7,000,000 Shares being registered hereunder pursuant to the Equity Agreement. At an assumed purchase price of $0.0855 under the Equity Agreement, we would be required to register approximately 16,392,000 additional shares to obtain the balance of $2,000,000 under the Equity Agreement. The Company is currently authorized to issue 45,000,000 shares of its common stock. TCA has agreed, subject to certain exceptions listed in the Equity Agreement, to refrain from holding an amount of shares which would result in TCA or its affiliates from owning more than 4.99% of the then-outstanding shares of the Company s common stock at any one time. We will bear the expenses of this offering, which we estimate to be approximately $12,300, including legal expenses of approximately $6,000, accounting expenses of approximately $5,500, and miscellaneous expenses, including printer costs, of approximately $800. There are substantial risks to investors as a result of the issuance of shares of our common stock under the Equity Agreement. These risks include dilution of stockholders, significant decline in our stock price and our inability to draw sufficient funds when needed. TCA will periodically purchase our common stock under the Equity Agreement and will, in turn, sell such shares to investors in the market at the market price. This may cause our stock price to decline, which will require us to issue increasing numbers of common shares to TCA to raise the same amount of funds, as our stock price declines. Neither the Equity Agreement nor any rights of the parties under the Equity Agreement may be assigned or delegated to any other person. Summary of the Shares Offered by the Selling Security Holder Common Stock Offered by the Selling Security Holder 7,000,000 shares of common stock. Common Stock Outstanding Before the Offering 31,933,153 as of February 7, 2013 Common Stock Outstanding After the Offering 38,933,153 shares, assuming the sale of all of the shares being registered in this Registration Statement. Terms of the Offering The Selling Security Holder will determine when and how it will sell the common stock offered in this prospectus. Termination of the Offering Pursuant to the Equity Agreement, this offering will terminate twenty-four (24) months after the registration statement to which this prospectus is made a part is declared effective by the SEC. Use of Proceeds We will not receive any proceeds from the sale of the shares of common stock offered by the Selling Security Holder. However, we will receive proceeds from the sale of our common stock under the Equity Agreement. The proceeds from the offering will be used for working capital and general corporate purpose, including repayment of amounts owed under the Company s Promissory Note in favor of TCA in the principal amount of $350,000, effective July 10, 2012 (the Promissory Note ). See Use of Proceeds. Risk Factors The common stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See Risk Factors beginning on page 11. OTCBB Symbol PMBS
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+This summary highlights information about Momentive Performance Materials Inc. and the Notes contained elsewhere in this prospectus. This summary may not contain all the information that may be important to you. You should carefully read the entire prospectus before making an investment decision, especially the information presented under the heading Risk Factors. In this prospectus, except as otherwise indicated herein, or as the context may otherwise require, all references to: (i) Momentive, the Company, we, us and our refer to Momentive Performance Materials Inc. and its subsidiaries and (ii) the MPM Group refers to Momentive Performance Materials Holdings Inc. and its subsidiaries. Company overview Momentive Performance Materials Inc. was formed through the acquisition of GE Advanced Materials on December 3, 2006. We believe we are one of the world s largest producers of silicones and silicone derivatives and a global leader in the development and manufacture of products derived from quartz and specialty ceramics. For the twelve months ended December 31, 2012, silicones and quartz represented approximately 91% and 9% of our revenue, respectively. Silicones are a multi-functional family of materials used in a wide variety of products, and serve as a critical ingredient in many construction, transportation, healthcare, personal care, electronic, consumer and agricultural uses. Silicones are generally used as an additive to a wide variety of end products in order to provide or enhance certain of their attributes, such as resistance (heat, ultraviolet light and chemical), lubrication, adhesion or viscosity. Some of the most well-known end-use product applications include bath and shower caulk, pressure-sensitive adhesive labels, foam products, cosmetics and tires. Due to the versatility and high-performance characteristics of silicones, they are increasingly being used as a substitute for other materials. Our Quartz business manufactures quartz, specialty ceramics and crystal products for use in a number of high-technology industries, which typically require products made to precise specifications. The cost of our products typically represents a small percentage of the overall cost of our customers products. On October 1, 2010, our parent, Momentive Performance Materials Holdings Inc. ( MPM Holdings ) and Momentive Specialty Chemicals Holdings LLC (formerly known as Hexion LLC and referred to herein as MSC Holdings ), the direct parent company of Momentive Specialty Chemicals Inc. (formerly known as Hexion Specialty Chemicals, Inc. and referred to herein as MSC ), became subsidiaries of a newly formed holding company, Momentive Performance Materials Holdings LLC ( Momentive Holdings ). We refer to this event as the Momentive Combination. As a result of the Momentive Combination, Momentive Holdings became the ultimate parent entity of Momentive and MSC. Momentive Holdings is controlled by investment funds (the Apollo Funds ) managed by affiliates of Apollo Management Holdings, L.P. (together with Apollo Global Management, LLC and its subsidiaries, Apollo ). Apollo may also be referred to as the Company s owner. We believe that our scale and global reach provide significant efficiencies in our fixed and variable cost structure and that our breadth of related products provides significant operational, technological and commercial advantages. Our manufacturing capacity at our internal sites and our joint venture in China is sufficient to produce the substantial majority of one of our key intermediates, siloxane, which facilitates a low-cost operating structure and security of supply. We are one of two producers in the silicones market with global siloxane production capacity. As of December 31, 2012, we had 22 production sites strategically located around the world, which allows us to produce the substantial majority of our key products locally in the Americas, Europe and Asia. Through this worldwide network of production facilities, we serve more than 5,500 customers between our Silicones and Quartz businesses in over 100 countries. Our customers include leading companies in their respective industries, such as Procter & Gamble, 3M, Goodyear, Unilever, Saint Gobain, Motorola, L Oreal, BASF, The Home Depot and Lowe s. Table of Contents EXHIBIT INDEX Exhibit Number Description of Document 2.1 Stock and Asset Purchase Agreement, dated as of September 14, 2006, by and between General Electric Company and Momentive Performance Materials Holdings Inc. (formerly known as Nautilus Holdings Acquisition Corp.) (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 2.2 Amendment to Stock and Asset Purchase Agreement, dated as of December 3, 2006, by and between General Electric Company and Momentive Performance Materials Holdings Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.1 Certificate of Incorporation, as amended, of Momentive Performance Materials Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.2 Amended and Restated By-laws of Momentive Performance Materials Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.3 Certificate of Incorporation, as amended, of Momentive Performance Materials Worldwide Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.4 Amended and Restated By-laws of Momentive Performance Materials Worldwide Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.5 Certificate of Incorporation, as amended, of Momentive Performance Materials China SPV Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.6 Amended and Restated By-laws of Momentive Performance Materials China SPV Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.7 Certificate of Incorporation, as amended, of Momentive Performance Materials South America Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.8 Amended and Restated By-laws of Momentive Performance Materials South America Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.9 Amended and Restated Operating Agreement of MPM Silicones, LLC (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.10 Articles of Organization, as amended, of MPM Silicones, LLC (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.11 Certificate of Incorporation, as amended, of Momentive Performance Materials Quartz, Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.12 Amended and Restated By-laws of Momentive Performance Materials Quartz, Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.13 Certificate of Incorporation, as amended, of Momentive Performance Materials USA Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.14 Amended and Restated By-laws of Momentive Performance Materials USA Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.15 Operating Agreement of Juniper Bond Holdings I LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) Table of Contents SCHEDULE A Guarantor State or Other Jurisdiction of Incorporation or Organization Address of Registrants Principal Executive Offices I.R.S. Employer Identification Number Momentive Performance Materials Worldwide Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5748357 Momentive Performance Materials USA Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5748388 Momentive Performance Materials China SPV Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5748469 Momentive Performance Materials South America Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5834895 MPM Silicones, LLC New York 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 22-3775481 Momentive Performance Materials Quartz, Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 34-1839929 Juniper Bond Holdings I LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589631 Juniper Bond Holdings II LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589692 Juniper Bond Holdings III LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589765 Juniper Bond Holdings IV LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589836 Table of Contents We have not authorized anyone to give you any information or to make any representations about us or the transactions we discuss in this prospectus other than those contained in this prospectus. If you are given any information or representations about these matters that is not discussed in this prospectus, you must not rely on that information. This prospectus is not an offer to sell or a solicitation of an offer to buy securities anywhere or to anyone where or to whom we are not permitted to offer or sell securities under applicable law. The delivery of this prospectus does not, under any circumstances, mean that there has not been a change in our affairs since the date of this prospectus. Subject to our obligation to amend or supplement this prospectus as required by law and the rules of the Securities and Exchange Commission, or the SEC, the information contained in this prospectus is correct only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of these securities. We will update this prospectus to the extent required by law. We are offering to sell the Notes only in jurisdictions where offers and sales are permitted. Table of Contents We believe we have created a value-added, technical service-oriented business model that enables us to target and participate in high-margin and high-growth specialty markets. These specialty markets account for the majority of our revenues and continue to be a growing part of our business. Revenue and Adjusted EBITDA (as defined in the section entitled Covenant Compliance elsewhere herein) for the twelve months ended December 31, 2012 were $2,357 million and $228 million, respectively. Net loss for the twelve months ended December 31, 2012 was $365 million. Our Strengths Our company has the following competitive strengths: Leading Global Silicones Producer. We believe we are one of the world s largest producers of silicones and silicone derivatives, with leading positions in various product lines and geographic areas. We believe our scale, global reach and breadth of product offerings provide us with significant advantages over many of our competitors by allowing us to serve global customers with precise specifications, particularly those expanding production in developing nations. Attractive Industry Growth Profile. The broad molecular characteristics of silicones continually lead to new uses and applications, which have led to worldwide industry growth in excess of GDP over the past 20 years. Drivers of growth include end-market growth and increased market penetration, with silicones increasingly being used as a value-added substitute for traditional materials or as a functional additive, which yields new properties for our customers products. For instance, silicones act as the conditioning ingredient in 2-in-1 shampoo. Broad-Based Diversification. Industry Diversification. Our Silicones business has a diversified revenue base across a variety of end-markets, reducing our vulnerability to industry trends. Furthermore, our products are often used in niche applications that represent a small portion of our customers material costs. Our leading end-markets are building and construction, which consists of industrial and infrastructure construction and repair, urethane foam additives and a number of other specialty products. Customer Diversification. We have a diverse customer base of more than 5,500 customers between our Silicones and Quartz businesses and are well balanced across multiple geographies. In 2012, our top 20 customers accounted for less than 22% of our total revenues, and no single customer accounted for more than 3% of our total revenues. We have maintained long-standing relationships with many of our customers. Geographic Diversification. We have a global sales presence, with approximately 38%, 31% and 31% of our 2012 and 2011 revenues generated in the Americas, Europe and Asia, respectively. Global Infrastructure. We are a global company with significant manufacturing capacity in each of the Americas, Europe and Asia. We have 22 production facilities located around the world, R&D centers on three continents and sales to customers in over 100 countries. The Silicones business has three siloxane production facilities located in Waterford, New York, Ohta, Japan and Leverkusen, Germany, as well as a siloxane manufacturing joint venture in Jiande, China, and two silanes production facilities in Sistersville, West Virginia and Termoli, Italy. The Quartz production sites are located in Ohio, Geesthacht, Germany, Kozuki, Japan and Wuxi, China. Table of Contents Exhibit Number Description of Document 3.16 Certificate of Formation of Juniper Bond Holdings I LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.17 Operating Agreement of Juniper Bond Holdings II LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.18 Certificate of Formation of Juniper Bond Holdings II LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.19 Operating Agreement of Juniper Bond Holdings III LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.20 Certificate of Formation of Juniper Bond Holdings III LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.21 Operating Agreement of Juniper Bond Holdings IV LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.22 Certificate of Formation of Juniper Bond Holdings IV LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 4.1 Indenture by and between Momentive Performance Materials Inc., Momentive Performance Materials Holdings Inc., Momentive Performance Materials Worldwide Inc., Momentive Performance Materials USA Inc., Momentive Performance Materials China SPV Inc., Momentive Performance Materials South America Inc., GE Quartz, Inc., GE Silicones, LLC and Momentive Performance Materials Inc., dated as of December 4, 2006, with respect to $500,000,000 11 1/2% Senior Subordinated Notes Due 2016 (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 4.2 11 1/2% Senior Subordinated Notes Due 2016 (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 4.3 Supplemental Indenture among Juniper Bond Holdings I LLC, Juniper Bond Holdings II LLC, Juniper Bond Holdings III LLC, Juniper Bond Holdings IV LLC and Wells Fargo Bank, N.A., dated as of December 20, 2007, with respect to the $500,000,000 11 1/2% Senior Subordinated Notes due 2016 (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 4.4 Agreement of registration, appointment and acceptance, effective as of June 8, 2009, by and among Momentive Performance Materials Inc., Wells Fargo Bank, N.A. and The Bank of New York Mellon Trust Company, N.A. (filed as exhibit 4.1 to our Form 8-K, filed on June 12, 2009) 4.5 Indenture, dated as of November 5, 2010, by and among Momentive Performance Materials Inc., the note guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent, including forms of the 9% Second-Priority Springing Lien Notes due 2021 (U.S. Dollar Denominated) and 9 1/2% Second-Priority Springing Lien Notes due 2021 (Euro Denominated) (filed as exhibit 4.1 to our Form 8-K, filed on November 12, 2010) 4.6 Indenture, dated as of May 25, 2012, by and among Momentive Performance Materials Inc., the Note Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (filed as exhibit 4.1 to our Form 8-K, filed on June 1, 2012) Table of Contents The information in this preliminary prospectus is not complete and may be changed. The selling security holders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated May 7, 2013 PROSPECTUS Momentive Performance Materials Inc. $124,323,000 11 1/2% Senior Subordinated Notes due 2016 This prospectus covers resales by holders of the 11 1/2% Senior Subordinated Notes due 2016 issued by Momentive Performance Materials Inc. ( Momentive ) on December 4, 2006, which we refer to herein as the Notes. The Notes mature on December 1, 2016. Interest on the Notes is payable in cash at a rate of 11 1/2% per annum, from the issue date or from the most recent date to which interest has been paid or provided for, payable semiannually to holders of record at the close of business on May 15 or November 15 immediately preceding the interest payment date on June 1 and December 1 of each year commencing June 1, 2007. Momentive may redeem some or all of the Notes, at the redemption prices set forth in this prospectus. See Description of Notes Optional Redemption. If we experience certain kinds of changes in control, we must offer to purchase the Notes. The Notes are subordinated to all our existing and future senior debt, including the 8.875% First-Priority Senior Secured Notes due 2020, the 10% Senior Secured Notes due 2020, the Second-Priority Springing Lien Notes due 2021 (together, the Senior Notes ), the ABL Facility (as defined herein) and the Cash Flow Facility (as defined herein), rank equally with all our existing and future senior subordinated debt and rank senior to all our existing and future subordinated debt. The Notes are guaranteed on an unsecured senior subordinated basis by each of Momentive s existing U.S. subsidiaries that is a guarantor under its Cash Flow Facility and each of its future U.S. subsidiaries that guarantee any debt of the Company or the Note Guarantors (the Note Guarantors ). The majority of our business in conducted through non-U.S. subsidiaries that are not guarantors of the Notes. If the Company fails to make payments on the Notes, the Note Guarantors must make them instead (the Note Guarantees ). We have not applied, and do not intend to apply, for listing of the Notes on any national securities exchange or automated quotation system. The selling security holders may sell the Notes covered by this prospectus in one or more transactions, directly to purchasers or through underwriters, brokers or dealers or agents, in public or private transactions, at fixed prices, prevailing market prices at the times of sale, prices related to the prevailing market prices, varying prices determined at the times of sale or negotiated prices. See Plan of Distribution. Momentive will not receive any proceeds from the resale of the Notes hereunder. See Risk Factors beginning on page 13 of this prospectus for a discussion of certain risks that you should consider before investing in the Notes. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2013. Table of Contents We use our global platform to deliver products to companies efficiently on a worldwide basis. Many of our customers are expanding internationally to serve developing areas in Asia, Eastern Europe, Latin America, India and Russia. Maintaining close proximity to our international customers allows us to serve them more quickly and efficiently and thus build strong relationships. Attractive Intermediate Position. We produce siloxane, the key intermediate required to manufacture silicones, in the United States, Germany and Japan, and source siloxane from a joint venture in China. This manufacturing capacity is sufficient to meet the substantial majority of our current requirements for siloxane. We also source a portion of our requirements through long-term and/or supply agreements. We believe this combination of siloxane supply, along with our ability to purchase siloxane from other suppliers when pricing is advantageous, reduces our overall cost structure and strengthens our overall competitiveness. Leading Fused Quartz and Specialty Ceramics Producer. We believe we are a global leader in the fused quartz and ceramics product markets in which we compete. In particular, we believe we are the largest manufacturer of quartz products for the semiconductor end-market and the second largest manufacturer of quartz products for fiber optics. Our leadership position and profitability are driven by several factors, including strong customer relationships and the precise quality and purity specifications of our products. Additionally, we believe we are a leader in several ceramic materials end-markets, including cosmetic additives. Risk Factors Despite our competitive strengths discussed above, investing in the Notes involves a number of risks, including: Our substantial debt could adversely affect our operations and prevent us from satisfying our obligations under our debt obligations. As of December 31, 2012, we had $3,116 million of consolidated outstanding indebtedness, including short-term borrowings, and, based on the consolidated indebtedness, our annualized cash interest expense is projected to be approximately $291 million based on interest rates at December 31, 2012 without giving effect to any subsequent borrowings under the previous revolving credit facility, the ABL Facility or the Cash Flow Facility, of which $288 million would represent cash interest expense on fixed-rate obligations; If global economic conditions weaken, it will continue to negatively impact our business, results of operations and financial condition; We may be unable to achieve the cost savings or synergies that we expect to achieve from our strategic initiatives, including the Momentive Combination, which would adversely affect our profitability and financial condition; Fluctuations in direct or indirect raw material costs could have an adverse impact on our business; and We depend on certain of our key executives and our ability to attract and retain qualified employees. For a discussion of the significant risks associated with our business, our industry and investing in the Notes, you should read the
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+This summary highlights information about Momentive Performance Materials Inc. and the Notes contained elsewhere in this prospectus. This summary may not contain all the information that may be important to you. You should carefully read the entire prospectus before making an investment decision, especially the information presented under the heading Risk Factors. In this prospectus, except as otherwise indicated herein, or as the context may otherwise require, all references to: (i) Momentive, the Company, we, us and our refer to Momentive Performance Materials Inc. and its subsidiaries and (ii) the MPM Group refers to Momentive Performance Materials Holdings Inc. and its subsidiaries. Company overview Momentive Performance Materials Inc. was formed through the acquisition of GE Advanced Materials on December 3, 2006. We believe we are one of the world s largest producers of silicones and silicone derivatives and a global leader in the development and manufacture of products derived from quartz and specialty ceramics. For the twelve months ended December 31, 2012, silicones and quartz represented approximately 91% and 9% of our revenue, respectively. Silicones are a multi-functional family of materials used in a wide variety of products, and serve as a critical ingredient in many construction, transportation, healthcare, personal care, electronic, consumer and agricultural uses. Silicones are generally used as an additive to a wide variety of end products in order to provide or enhance certain of their attributes, such as resistance (heat, ultraviolet light and chemical), lubrication, adhesion or viscosity. Some of the most well-known end-use product applications include bath and shower caulk, pressure-sensitive adhesive labels, foam products, cosmetics and tires. Due to the versatility and high-performance characteristics of silicones, they are increasingly being used as a substitute for other materials. Our Quartz business manufactures quartz, specialty ceramics and crystal products for use in a number of high-technology industries, which typically require products made to precise specifications. The cost of our products typically represents a small percentage of the overall cost of our customers products. On October 1, 2010, our parent, Momentive Performance Materials Holdings Inc. ( MPM Holdings ) and Momentive Specialty Chemicals Holdings LLC (formerly known as Hexion LLC and referred to herein as MSC Holdings ), the direct parent company of Momentive Specialty Chemicals Inc. (formerly known as Hexion Specialty Chemicals, Inc. and referred to herein as MSC ), became subsidiaries of a newly formed holding company, Momentive Performance Materials Holdings LLC ( Momentive Holdings ). We refer to this event as the Momentive Combination. As a result of the Momentive Combination, Momentive Holdings became the ultimate parent entity of Momentive and MSC. Momentive Holdings is controlled by investment funds (the Apollo Funds ) managed by affiliates of Apollo Management Holdings, L.P. (together with Apollo Global Management, LLC and its subsidiaries, Apollo ). Apollo may also be referred to as the Company s owner. We believe that our scale and global reach provide significant efficiencies in our fixed and variable cost structure and that our breadth of related products provides significant operational, technological and commercial advantages. Our manufacturing capacity at our internal sites and our joint venture in China is sufficient to produce the substantial majority of one of our key intermediates, siloxane, which facilitates a low-cost operating structure and security of supply. We are one of two producers in the silicones market with global siloxane production capacity. As of December 31, 2012, we had 22 production sites strategically located around the world, which allows us to produce the substantial majority of our key products locally in the Americas, Europe and Asia. Through this worldwide network of production facilities, we serve more than 5,500 customers between our Silicones and Quartz businesses in over 100 countries. Our customers include leading companies in their respective industries, such as Procter & Gamble, 3M, Goodyear, Unilever, Saint Gobain, Motorola, L Oreal, BASF, The Home Depot and Lowe s. Table of Contents EXHIBIT INDEX Exhibit Number Description of Document 2.1 Stock and Asset Purchase Agreement, dated as of September 14, 2006, by and between General Electric Company and Momentive Performance Materials Holdings Inc. (formerly known as Nautilus Holdings Acquisition Corp.) (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 2.2 Amendment to Stock and Asset Purchase Agreement, dated as of December 3, 2006, by and between General Electric Company and Momentive Performance Materials Holdings Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.1 Certificate of Incorporation, as amended, of Momentive Performance Materials Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.2 Amended and Restated By-laws of Momentive Performance Materials Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.3 Certificate of Incorporation, as amended, of Momentive Performance Materials Worldwide Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.4 Amended and Restated By-laws of Momentive Performance Materials Worldwide Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.5 Certificate of Incorporation, as amended, of Momentive Performance Materials China SPV Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.6 Amended and Restated By-laws of Momentive Performance Materials China SPV Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.7 Certificate of Incorporation, as amended, of Momentive Performance Materials South America Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.8 Amended and Restated By-laws of Momentive Performance Materials South America Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.9 Amended and Restated Operating Agreement of MPM Silicones, LLC (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.10 Articles of Organization, as amended, of MPM Silicones, LLC (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.11 Certificate of Incorporation, as amended, of Momentive Performance Materials Quartz, Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.12 Amended and Restated By-laws of Momentive Performance Materials Quartz, Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.13 Certificate of Incorporation, as amended, of Momentive Performance Materials USA Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.14 Amended and Restated By-laws of Momentive Performance Materials USA Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.15 Operating Agreement of Juniper Bond Holdings I LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) Table of Contents SCHEDULE A Guarantor State or Other Jurisdiction of Incorporation or Organization Address of Registrants Principal Executive Offices I.R.S. Employer Identification Number Momentive Performance Materials Worldwide Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5748357 Momentive Performance Materials USA Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5748388 Momentive Performance Materials China SPV Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5748469 Momentive Performance Materials South America Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5834895 MPM Silicones, LLC New York 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 22-3775481 Momentive Performance Materials Quartz, Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 34-1839929 Juniper Bond Holdings I LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589631 Juniper Bond Holdings II LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589692 Juniper Bond Holdings III LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589765 Juniper Bond Holdings IV LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589836 Table of Contents We have not authorized anyone to give you any information or to make any representations about us or the transactions we discuss in this prospectus other than those contained in this prospectus. If you are given any information or representations about these matters that is not discussed in this prospectus, you must not rely on that information. This prospectus is not an offer to sell or a solicitation of an offer to buy securities anywhere or to anyone where or to whom we are not permitted to offer or sell securities under applicable law. The delivery of this prospectus does not, under any circumstances, mean that there has not been a change in our affairs since the date of this prospectus. Subject to our obligation to amend or supplement this prospectus as required by law and the rules of the Securities and Exchange Commission, or the SEC, the information contained in this prospectus is correct only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of these securities. We will update this prospectus to the extent required by law. We are offering to sell the Notes only in jurisdictions where offers and sales are permitted. Table of Contents We believe we have created a value-added, technical service-oriented business model that enables us to target and participate in high-margin and high-growth specialty markets. These specialty markets account for the majority of our revenues and continue to be a growing part of our business. Revenue and Adjusted EBITDA (as defined in the section entitled Covenant Compliance elsewhere herein) for the twelve months ended December 31, 2012 were $2,357 million and $228 million, respectively. Net loss for the twelve months ended December 31, 2012 was $365 million. Our Strengths Our company has the following competitive strengths: Leading Global Silicones Producer. We believe we are one of the world s largest producers of silicones and silicone derivatives, with leading positions in various product lines and geographic areas. We believe our scale, global reach and breadth of product offerings provide us with significant advantages over many of our competitors by allowing us to serve global customers with precise specifications, particularly those expanding production in developing nations. Attractive Industry Growth Profile. The broad molecular characteristics of silicones continually lead to new uses and applications, which have led to worldwide industry growth in excess of GDP over the past 20 years. Drivers of growth include end-market growth and increased market penetration, with silicones increasingly being used as a value-added substitute for traditional materials or as a functional additive, which yields new properties for our customers products. For instance, silicones act as the conditioning ingredient in 2-in-1 shampoo. Broad-Based Diversification. Industry Diversification. Our Silicones business has a diversified revenue base across a variety of end-markets, reducing our vulnerability to industry trends. Furthermore, our products are often used in niche applications that represent a small portion of our customers material costs. Our leading end-markets are building and construction, which consists of industrial and infrastructure construction and repair, urethane foam additives and a number of other specialty products. Customer Diversification. We have a diverse customer base of more than 5,500 customers between our Silicones and Quartz businesses and are well balanced across multiple geographies. In 2012, our top 20 customers accounted for less than 22% of our total revenues, and no single customer accounted for more than 3% of our total revenues. We have maintained long-standing relationships with many of our customers. Geographic Diversification. We have a global sales presence, with approximately 38%, 31% and 31% of our 2012 and 2011 revenues generated in the Americas, Europe and Asia, respectively. Global Infrastructure. We are a global company with significant manufacturing capacity in each of the Americas, Europe and Asia. We have 22 production facilities located around the world, R&D centers on three continents and sales to customers in over 100 countries. The Silicones business has three siloxane production facilities located in Waterford, New York, Ohta, Japan and Leverkusen, Germany, as well as a siloxane manufacturing joint venture in Jiande, China, and two silanes production facilities in Sistersville, West Virginia and Termoli, Italy. The Quartz production sites are located in Ohio, Geesthacht, Germany, Kozuki, Japan and Wuxi, China. Table of Contents Exhibit Number Description of Document 3.16 Certificate of Formation of Juniper Bond Holdings I LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.17 Operating Agreement of Juniper Bond Holdings II LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.18 Certificate of Formation of Juniper Bond Holdings II LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.19 Operating Agreement of Juniper Bond Holdings III LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.20 Certificate of Formation of Juniper Bond Holdings III LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.21 Operating Agreement of Juniper Bond Holdings IV LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.22 Certificate of Formation of Juniper Bond Holdings IV LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 4.1 Indenture by and between Momentive Performance Materials Inc., Momentive Performance Materials Holdings Inc., Momentive Performance Materials Worldwide Inc., Momentive Performance Materials USA Inc., Momentive Performance Materials China SPV Inc., Momentive Performance Materials South America Inc., GE Quartz, Inc., GE Silicones, LLC and Momentive Performance Materials Inc., dated as of December 4, 2006, with respect to $500,000,000 11 1/2% Senior Subordinated Notes Due 2016 (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 4.2 11 1/2% Senior Subordinated Notes Due 2016 (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 4.3 Supplemental Indenture among Juniper Bond Holdings I LLC, Juniper Bond Holdings II LLC, Juniper Bond Holdings III LLC, Juniper Bond Holdings IV LLC and Wells Fargo Bank, N.A., dated as of December 20, 2007, with respect to the $500,000,000 11 1/2% Senior Subordinated Notes due 2016 (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 4.4 Agreement of registration, appointment and acceptance, effective as of June 8, 2009, by and among Momentive Performance Materials Inc., Wells Fargo Bank, N.A. and The Bank of New York Mellon Trust Company, N.A. (filed as exhibit 4.1 to our Form 8-K, filed on June 12, 2009) 4.5 Indenture, dated as of November 5, 2010, by and among Momentive Performance Materials Inc., the note guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent, including forms of the 9% Second-Priority Springing Lien Notes due 2021 (U.S. Dollar Denominated) and 9 1/2% Second-Priority Springing Lien Notes due 2021 (Euro Denominated) (filed as exhibit 4.1 to our Form 8-K, filed on November 12, 2010) 4.6 Indenture, dated as of May 25, 2012, by and among Momentive Performance Materials Inc., the Note Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (filed as exhibit 4.1 to our Form 8-K, filed on June 1, 2012) Table of Contents The information in this preliminary prospectus is not complete and may be changed. The selling security holders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated May 7, 2013 PROSPECTUS Momentive Performance Materials Inc. $124,323,000 11 1/2% Senior Subordinated Notes due 2016 This prospectus covers resales by holders of the 11 1/2% Senior Subordinated Notes due 2016 issued by Momentive Performance Materials Inc. ( Momentive ) on December 4, 2006, which we refer to herein as the Notes. The Notes mature on December 1, 2016. Interest on the Notes is payable in cash at a rate of 11 1/2% per annum, from the issue date or from the most recent date to which interest has been paid or provided for, payable semiannually to holders of record at the close of business on May 15 or November 15 immediately preceding the interest payment date on June 1 and December 1 of each year commencing June 1, 2007. Momentive may redeem some or all of the Notes, at the redemption prices set forth in this prospectus. See Description of Notes Optional Redemption. If we experience certain kinds of changes in control, we must offer to purchase the Notes. The Notes are subordinated to all our existing and future senior debt, including the 8.875% First-Priority Senior Secured Notes due 2020, the 10% Senior Secured Notes due 2020, the Second-Priority Springing Lien Notes due 2021 (together, the Senior Notes ), the ABL Facility (as defined herein) and the Cash Flow Facility (as defined herein), rank equally with all our existing and future senior subordinated debt and rank senior to all our existing and future subordinated debt. The Notes are guaranteed on an unsecured senior subordinated basis by each of Momentive s existing U.S. subsidiaries that is a guarantor under its Cash Flow Facility and each of its future U.S. subsidiaries that guarantee any debt of the Company or the Note Guarantors (the Note Guarantors ). The majority of our business in conducted through non-U.S. subsidiaries that are not guarantors of the Notes. If the Company fails to make payments on the Notes, the Note Guarantors must make them instead (the Note Guarantees ). We have not applied, and do not intend to apply, for listing of the Notes on any national securities exchange or automated quotation system. The selling security holders may sell the Notes covered by this prospectus in one or more transactions, directly to purchasers or through underwriters, brokers or dealers or agents, in public or private transactions, at fixed prices, prevailing market prices at the times of sale, prices related to the prevailing market prices, varying prices determined at the times of sale or negotiated prices. See Plan of Distribution. Momentive will not receive any proceeds from the resale of the Notes hereunder. See Risk Factors beginning on page 13 of this prospectus for a discussion of certain risks that you should consider before investing in the Notes. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2013. Table of Contents We use our global platform to deliver products to companies efficiently on a worldwide basis. Many of our customers are expanding internationally to serve developing areas in Asia, Eastern Europe, Latin America, India and Russia. Maintaining close proximity to our international customers allows us to serve them more quickly and efficiently and thus build strong relationships. Attractive Intermediate Position. We produce siloxane, the key intermediate required to manufacture silicones, in the United States, Germany and Japan, and source siloxane from a joint venture in China. This manufacturing capacity is sufficient to meet the substantial majority of our current requirements for siloxane. We also source a portion of our requirements through long-term and/or supply agreements. We believe this combination of siloxane supply, along with our ability to purchase siloxane from other suppliers when pricing is advantageous, reduces our overall cost structure and strengthens our overall competitiveness. Leading Fused Quartz and Specialty Ceramics Producer. We believe we are a global leader in the fused quartz and ceramics product markets in which we compete. In particular, we believe we are the largest manufacturer of quartz products for the semiconductor end-market and the second largest manufacturer of quartz products for fiber optics. Our leadership position and profitability are driven by several factors, including strong customer relationships and the precise quality and purity specifications of our products. Additionally, we believe we are a leader in several ceramic materials end-markets, including cosmetic additives. Risk Factors Despite our competitive strengths discussed above, investing in the Notes involves a number of risks, including: Our substantial debt could adversely affect our operations and prevent us from satisfying our obligations under our debt obligations. As of December 31, 2012, we had $3,116 million of consolidated outstanding indebtedness, including short-term borrowings, and, based on the consolidated indebtedness, our annualized cash interest expense is projected to be approximately $291 million based on interest rates at December 31, 2012 without giving effect to any subsequent borrowings under the previous revolving credit facility, the ABL Facility or the Cash Flow Facility, of which $288 million would represent cash interest expense on fixed-rate obligations; If global economic conditions weaken, it will continue to negatively impact our business, results of operations and financial condition; We may be unable to achieve the cost savings or synergies that we expect to achieve from our strategic initiatives, including the Momentive Combination, which would adversely affect our profitability and financial condition; Fluctuations in direct or indirect raw material costs could have an adverse impact on our business; and We depend on certain of our key executives and our ability to attract and retain qualified employees. For a discussion of the significant risks associated with our business, our industry and investing in the Notes, you should read the
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+This summary highlights information about Momentive Performance Materials Inc. and the Notes contained elsewhere in this prospectus. This summary may not contain all the information that may be important to you. You should carefully read the entire prospectus before making an investment decision, especially the information presented under the heading Risk Factors. In this prospectus, except as otherwise indicated herein, or as the context may otherwise require, all references to: (i) Momentive, the Company, we, us and our refer to Momentive Performance Materials Inc. and its subsidiaries and (ii) the MPM Group refers to Momentive Performance Materials Holdings Inc. and its subsidiaries. Company overview Momentive Performance Materials Inc. was formed through the acquisition of GE Advanced Materials on December 3, 2006. We believe we are one of the world s largest producers of silicones and silicone derivatives and a global leader in the development and manufacture of products derived from quartz and specialty ceramics. For the twelve months ended December 31, 2012, silicones and quartz represented approximately 91% and 9% of our revenue, respectively. Silicones are a multi-functional family of materials used in a wide variety of products, and serve as a critical ingredient in many construction, transportation, healthcare, personal care, electronic, consumer and agricultural uses. Silicones are generally used as an additive to a wide variety of end products in order to provide or enhance certain of their attributes, such as resistance (heat, ultraviolet light and chemical), lubrication, adhesion or viscosity. Some of the most well-known end-use product applications include bath and shower caulk, pressure-sensitive adhesive labels, foam products, cosmetics and tires. Due to the versatility and high-performance characteristics of silicones, they are increasingly being used as a substitute for other materials. Our Quartz business manufactures quartz, specialty ceramics and crystal products for use in a number of high-technology industries, which typically require products made to precise specifications. The cost of our products typically represents a small percentage of the overall cost of our customers products. On October 1, 2010, our parent, Momentive Performance Materials Holdings Inc. ( MPM Holdings ) and Momentive Specialty Chemicals Holdings LLC (formerly known as Hexion LLC and referred to herein as MSC Holdings ), the direct parent company of Momentive Specialty Chemicals Inc. (formerly known as Hexion Specialty Chemicals, Inc. and referred to herein as MSC ), became subsidiaries of a newly formed holding company, Momentive Performance Materials Holdings LLC ( Momentive Holdings ). We refer to this event as the Momentive Combination. As a result of the Momentive Combination, Momentive Holdings became the ultimate parent entity of Momentive and MSC. Momentive Holdings is controlled by investment funds (the Apollo Funds ) managed by affiliates of Apollo Management Holdings, L.P. (together with Apollo Global Management, LLC and its subsidiaries, Apollo ). Apollo may also be referred to as the Company s owner. We believe that our scale and global reach provide significant efficiencies in our fixed and variable cost structure and that our breadth of related products provides significant operational, technological and commercial advantages. Our manufacturing capacity at our internal sites and our joint venture in China is sufficient to produce the substantial majority of one of our key intermediates, siloxane, which facilitates a low-cost operating structure and security of supply. We are one of two producers in the silicones market with global siloxane production capacity. As of December 31, 2012, we had 22 production sites strategically located around the world, which allows us to produce the substantial majority of our key products locally in the Americas, Europe and Asia. Through this worldwide network of production facilities, we serve more than 5,500 customers between our Silicones and Quartz businesses in over 100 countries. Our customers include leading companies in their respective industries, such as Procter & Gamble, 3M, Goodyear, Unilever, Saint Gobain, Motorola, L Oreal, BASF, The Home Depot and Lowe s. Table of Contents EXHIBIT INDEX Exhibit Number Description of Document 2.1 Stock and Asset Purchase Agreement, dated as of September 14, 2006, by and between General Electric Company and Momentive Performance Materials Holdings Inc. (formerly known as Nautilus Holdings Acquisition Corp.) (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 2.2 Amendment to Stock and Asset Purchase Agreement, dated as of December 3, 2006, by and between General Electric Company and Momentive Performance Materials Holdings Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.1 Certificate of Incorporation, as amended, of Momentive Performance Materials Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.2 Amended and Restated By-laws of Momentive Performance Materials Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.3 Certificate of Incorporation, as amended, of Momentive Performance Materials Worldwide Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.4 Amended and Restated By-laws of Momentive Performance Materials Worldwide Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.5 Certificate of Incorporation, as amended, of Momentive Performance Materials China SPV Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.6 Amended and Restated By-laws of Momentive Performance Materials China SPV Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.7 Certificate of Incorporation, as amended, of Momentive Performance Materials South America Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.8 Amended and Restated By-laws of Momentive Performance Materials South America Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.9 Amended and Restated Operating Agreement of MPM Silicones, LLC (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.10 Articles of Organization, as amended, of MPM Silicones, LLC (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.11 Certificate of Incorporation, as amended, of Momentive Performance Materials Quartz, Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.12 Amended and Restated By-laws of Momentive Performance Materials Quartz, Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.13 Certificate of Incorporation, as amended, of Momentive Performance Materials USA Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.14 Amended and Restated By-laws of Momentive Performance Materials USA Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.15 Operating Agreement of Juniper Bond Holdings I LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) Table of Contents SCHEDULE A Guarantor State or Other Jurisdiction of Incorporation or Organization Address of Registrants Principal Executive Offices I.R.S. Employer Identification Number Momentive Performance Materials Worldwide Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5748357 Momentive Performance Materials USA Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5748388 Momentive Performance Materials China SPV Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5748469 Momentive Performance Materials South America Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5834895 MPM Silicones, LLC New York 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 22-3775481 Momentive Performance Materials Quartz, Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 34-1839929 Juniper Bond Holdings I LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589631 Juniper Bond Holdings II LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589692 Juniper Bond Holdings III LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589765 Juniper Bond Holdings IV LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589836 Table of Contents We have not authorized anyone to give you any information or to make any representations about us or the transactions we discuss in this prospectus other than those contained in this prospectus. If you are given any information or representations about these matters that is not discussed in this prospectus, you must not rely on that information. This prospectus is not an offer to sell or a solicitation of an offer to buy securities anywhere or to anyone where or to whom we are not permitted to offer or sell securities under applicable law. The delivery of this prospectus does not, under any circumstances, mean that there has not been a change in our affairs since the date of this prospectus. Subject to our obligation to amend or supplement this prospectus as required by law and the rules of the Securities and Exchange Commission, or the SEC, the information contained in this prospectus is correct only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of these securities. We will update this prospectus to the extent required by law. We are offering to sell the Notes only in jurisdictions where offers and sales are permitted. Table of Contents We believe we have created a value-added, technical service-oriented business model that enables us to target and participate in high-margin and high-growth specialty markets. These specialty markets account for the majority of our revenues and continue to be a growing part of our business. Revenue and Adjusted EBITDA (as defined in the section entitled Covenant Compliance elsewhere herein) for the twelve months ended December 31, 2012 were $2,357 million and $228 million, respectively. Net loss for the twelve months ended December 31, 2012 was $365 million. Our Strengths Our company has the following competitive strengths: Leading Global Silicones Producer. We believe we are one of the world s largest producers of silicones and silicone derivatives, with leading positions in various product lines and geographic areas. We believe our scale, global reach and breadth of product offerings provide us with significant advantages over many of our competitors by allowing us to serve global customers with precise specifications, particularly those expanding production in developing nations. Attractive Industry Growth Profile. The broad molecular characteristics of silicones continually lead to new uses and applications, which have led to worldwide industry growth in excess of GDP over the past 20 years. Drivers of growth include end-market growth and increased market penetration, with silicones increasingly being used as a value-added substitute for traditional materials or as a functional additive, which yields new properties for our customers products. For instance, silicones act as the conditioning ingredient in 2-in-1 shampoo. Broad-Based Diversification. Industry Diversification. Our Silicones business has a diversified revenue base across a variety of end-markets, reducing our vulnerability to industry trends. Furthermore, our products are often used in niche applications that represent a small portion of our customers material costs. Our leading end-markets are building and construction, which consists of industrial and infrastructure construction and repair, urethane foam additives and a number of other specialty products. Customer Diversification. We have a diverse customer base of more than 5,500 customers between our Silicones and Quartz businesses and are well balanced across multiple geographies. In 2012, our top 20 customers accounted for less than 22% of our total revenues, and no single customer accounted for more than 3% of our total revenues. We have maintained long-standing relationships with many of our customers. Geographic Diversification. We have a global sales presence, with approximately 38%, 31% and 31% of our 2012 and 2011 revenues generated in the Americas, Europe and Asia, respectively. Global Infrastructure. We are a global company with significant manufacturing capacity in each of the Americas, Europe and Asia. We have 22 production facilities located around the world, R&D centers on three continents and sales to customers in over 100 countries. The Silicones business has three siloxane production facilities located in Waterford, New York, Ohta, Japan and Leverkusen, Germany, as well as a siloxane manufacturing joint venture in Jiande, China, and two silanes production facilities in Sistersville, West Virginia and Termoli, Italy. The Quartz production sites are located in Ohio, Geesthacht, Germany, Kozuki, Japan and Wuxi, China. Table of Contents Exhibit Number Description of Document 3.16 Certificate of Formation of Juniper Bond Holdings I LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.17 Operating Agreement of Juniper Bond Holdings II LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.18 Certificate of Formation of Juniper Bond Holdings II LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.19 Operating Agreement of Juniper Bond Holdings III LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.20 Certificate of Formation of Juniper Bond Holdings III LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.21 Operating Agreement of Juniper Bond Holdings IV LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.22 Certificate of Formation of Juniper Bond Holdings IV LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 4.1 Indenture by and between Momentive Performance Materials Inc., Momentive Performance Materials Holdings Inc., Momentive Performance Materials Worldwide Inc., Momentive Performance Materials USA Inc., Momentive Performance Materials China SPV Inc., Momentive Performance Materials South America Inc., GE Quartz, Inc., GE Silicones, LLC and Momentive Performance Materials Inc., dated as of December 4, 2006, with respect to $500,000,000 11 1/2% Senior Subordinated Notes Due 2016 (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 4.2 11 1/2% Senior Subordinated Notes Due 2016 (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 4.3 Supplemental Indenture among Juniper Bond Holdings I LLC, Juniper Bond Holdings II LLC, Juniper Bond Holdings III LLC, Juniper Bond Holdings IV LLC and Wells Fargo Bank, N.A., dated as of December 20, 2007, with respect to the $500,000,000 11 1/2% Senior Subordinated Notes due 2016 (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 4.4 Agreement of registration, appointment and acceptance, effective as of June 8, 2009, by and among Momentive Performance Materials Inc., Wells Fargo Bank, N.A. and The Bank of New York Mellon Trust Company, N.A. (filed as exhibit 4.1 to our Form 8-K, filed on June 12, 2009) 4.5 Indenture, dated as of November 5, 2010, by and among Momentive Performance Materials Inc., the note guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent, including forms of the 9% Second-Priority Springing Lien Notes due 2021 (U.S. Dollar Denominated) and 9 1/2% Second-Priority Springing Lien Notes due 2021 (Euro Denominated) (filed as exhibit 4.1 to our Form 8-K, filed on November 12, 2010) 4.6 Indenture, dated as of May 25, 2012, by and among Momentive Performance Materials Inc., the Note Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (filed as exhibit 4.1 to our Form 8-K, filed on June 1, 2012) Table of Contents The information in this preliminary prospectus is not complete and may be changed. The selling security holders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated May 7, 2013 PROSPECTUS Momentive Performance Materials Inc. $124,323,000 11 1/2% Senior Subordinated Notes due 2016 This prospectus covers resales by holders of the 11 1/2% Senior Subordinated Notes due 2016 issued by Momentive Performance Materials Inc. ( Momentive ) on December 4, 2006, which we refer to herein as the Notes. The Notes mature on December 1, 2016. Interest on the Notes is payable in cash at a rate of 11 1/2% per annum, from the issue date or from the most recent date to which interest has been paid or provided for, payable semiannually to holders of record at the close of business on May 15 or November 15 immediately preceding the interest payment date on June 1 and December 1 of each year commencing June 1, 2007. Momentive may redeem some or all of the Notes, at the redemption prices set forth in this prospectus. See Description of Notes Optional Redemption. If we experience certain kinds of changes in control, we must offer to purchase the Notes. The Notes are subordinated to all our existing and future senior debt, including the 8.875% First-Priority Senior Secured Notes due 2020, the 10% Senior Secured Notes due 2020, the Second-Priority Springing Lien Notes due 2021 (together, the Senior Notes ), the ABL Facility (as defined herein) and the Cash Flow Facility (as defined herein), rank equally with all our existing and future senior subordinated debt and rank senior to all our existing and future subordinated debt. The Notes are guaranteed on an unsecured senior subordinated basis by each of Momentive s existing U.S. subsidiaries that is a guarantor under its Cash Flow Facility and each of its future U.S. subsidiaries that guarantee any debt of the Company or the Note Guarantors (the Note Guarantors ). The majority of our business in conducted through non-U.S. subsidiaries that are not guarantors of the Notes. If the Company fails to make payments on the Notes, the Note Guarantors must make them instead (the Note Guarantees ). We have not applied, and do not intend to apply, for listing of the Notes on any national securities exchange or automated quotation system. The selling security holders may sell the Notes covered by this prospectus in one or more transactions, directly to purchasers or through underwriters, brokers or dealers or agents, in public or private transactions, at fixed prices, prevailing market prices at the times of sale, prices related to the prevailing market prices, varying prices determined at the times of sale or negotiated prices. See Plan of Distribution. Momentive will not receive any proceeds from the resale of the Notes hereunder. See Risk Factors beginning on page 13 of this prospectus for a discussion of certain risks that you should consider before investing in the Notes. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2013. Table of Contents We use our global platform to deliver products to companies efficiently on a worldwide basis. Many of our customers are expanding internationally to serve developing areas in Asia, Eastern Europe, Latin America, India and Russia. Maintaining close proximity to our international customers allows us to serve them more quickly and efficiently and thus build strong relationships. Attractive Intermediate Position. We produce siloxane, the key intermediate required to manufacture silicones, in the United States, Germany and Japan, and source siloxane from a joint venture in China. This manufacturing capacity is sufficient to meet the substantial majority of our current requirements for siloxane. We also source a portion of our requirements through long-term and/or supply agreements. We believe this combination of siloxane supply, along with our ability to purchase siloxane from other suppliers when pricing is advantageous, reduces our overall cost structure and strengthens our overall competitiveness. Leading Fused Quartz and Specialty Ceramics Producer. We believe we are a global leader in the fused quartz and ceramics product markets in which we compete. In particular, we believe we are the largest manufacturer of quartz products for the semiconductor end-market and the second largest manufacturer of quartz products for fiber optics. Our leadership position and profitability are driven by several factors, including strong customer relationships and the precise quality and purity specifications of our products. Additionally, we believe we are a leader in several ceramic materials end-markets, including cosmetic additives. Risk Factors Despite our competitive strengths discussed above, investing in the Notes involves a number of risks, including: Our substantial debt could adversely affect our operations and prevent us from satisfying our obligations under our debt obligations. As of December 31, 2012, we had $3,116 million of consolidated outstanding indebtedness, including short-term borrowings, and, based on the consolidated indebtedness, our annualized cash interest expense is projected to be approximately $291 million based on interest rates at December 31, 2012 without giving effect to any subsequent borrowings under the previous revolving credit facility, the ABL Facility or the Cash Flow Facility, of which $288 million would represent cash interest expense on fixed-rate obligations; If global economic conditions weaken, it will continue to negatively impact our business, results of operations and financial condition; We may be unable to achieve the cost savings or synergies that we expect to achieve from our strategic initiatives, including the Momentive Combination, which would adversely affect our profitability and financial condition; Fluctuations in direct or indirect raw material costs could have an adverse impact on our business; and We depend on certain of our key executives and our ability to attract and retain qualified employees. For a discussion of the significant risks associated with our business, our industry and investing in the Notes, you should read the
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+Cost of Sales and Gross Profit For the three and nine months ended September 30, 2012, our cost of sales was $1,531,824 (86% of revenues) and $2,174,795 (67% of revenues), respectively, compared to $159,383 (70% of revenues) and $209,830 (70% of revenues), respectively, for the three and nine months ended September 30, 2011. In 2012, our cost of sales as a percentage of revenues was higher for the three months ended September 30, as compared to the nine months ended September 30, because of a larger percentage of sales made at lower margins during the third quarter as compared to year to date. Operating Expenses Operating Expenses for 2012 Our total operating expenses of $822,897 for the three months ended September 30, 2012 consisted of general and administrative expenses of $361,052 (44% of the total operating expenses), salaries and commissions of $265,960 (32% of the total operating expenses), and professional fees of $195,885 (24% of the total operating expenses). Our total operating expenses was 46% of our revenues for the period. Our total operating expenses of $2,335,240 for the nine months ended September 30, 2012 consisted of general and administrative expenses of $1,126,837 (48% of the total operating expenses), salaries and commissions of $679,022 (29% of the total operating expenses), and professional fees of $529,381 (23% of the total operating expenses). Our total operating expenses was 72% of our revenues for the period. Our total operating expenses for the nine months ended September 30, 2012 was a significantly higher percentage of our revenues as compared to the three months ended September 30, 2012 (72% versus 46%) because of non-recurring expenses associated with going public along with one time advertising expenses and stocking fees. Operating Expenses for 2011 Our total operating expenses of $227,520 for the three months ended September 30, 2011 consisted of general and administrative expenses of $92,234 (41% of the total operating expenses), salaries and commissions of $58,454 (26% of the total operating expenses), and professional fees of $76,832 (34% of the total operating expenses). Our total operating expenses was 99% of our revenues for the period. Our total operating expenses of $384,099 for the nine months ended September 30, 2011 consisted of general and administrative expenses of $194,258 (51% of the total operating expenses), salaries and commissions of $77,320 (20% of the total operating expenses), and professional fees of $112,521 (29% of the total operating expenses). Our total operating expenses was 128% of our revenues for the period. Because our operations were new, our revenues were low, and we were not getting the benefit of any economies of scale, we do not believe that our operating expenses for 2011 are indicative of our financial performance going forward. Operating Loss For the three and nine months ended September 30, 2012, our operating loss was $574,005 and $1,263,788, respectively, compared to $158,572 and $293,999, respectively, for the three and nine months ended September 30, 2011. Our operating loss increased significantly in each period as compared to the same period last year because our operations were new in 2011 and we were not incurring expenses at the same magnitude as in 2012. Other Expenses Other Expenses for 2012 Our total other expenses of $463,439 for the three months ended September 30, 2012 consisted of derivative losses of $377,685 and interest expense of $85,754. Our total other expenses of $591,059 for the nine months ended September 30, 2012 consisted of derivative losses of $328,267 and interest expense of $262,792, both of which are non-operating expenses. Other Expenses for 2011 Our total other expenses of $538 for the three months ended September 30, 2011 consisted entirely of interest expense. Our total other expenses of $4,302 for the nine months ended September 30, 2011 also consisted entirely of interest expense. Net Loss For the three and nine months ended September 30, 2012, our net loss was $1,037,444 and $1,854,847, respectively, compared to $159,110 and $298,301, respectively, for the three and nine months ended September 30, 2011. For the nine months ended September 30, 2012, after adjusting for derivative losses of $328,267, interest expense of $262,792, and other non-recurring expenses such as $196,880 associated with going public, and $535,980 of advertising and slotting fees, our recurring net loss was approximately $530,928. Liquidity and Capital Resources Introduction Our principal needs for liquidity have been to fund operating losses, working capital requirements, and debt service. Our principal source of liquidity as of September 30, 2012 consisted of cash of $44,593. We expect that working capital requirements and debt service will continue to be our principal needs for liquidity over the near term. Working capital requirements are expected to increase as a result of our anticipated growth. We have not yet established an ongoing source of revenues sufficient to cover our operating costs and allow us to continue as a going concern. Our ability to continue as a going concern is dependent on obtaining adequate capital to fund operating losses until we become profitable. If we are unable to obtain adequate capital, we could be forced to cease operations. Management s plan to meet our operating expenses is through equity and/or debt financing. However management cannot provide any assurances that we will be successful in accomplishing any of our plans. Our cash, current assets, total assets, current liabilities, and total liabilities as of September 30, 2012 and December 31, 2011, respectively, are as follows: September 30, December 31, 2012 2011 Change Cash $ 44,593 $ 38,658 $ 5,935 Total Current Assets 751,580 274,919 476,661 Total Assets 845,501 304,602 540,899 Total Current Liabilities 1,022,228 674,351 347,877 Total Liabilities 2,972,212 674,351 2,297,861 Our cash increased slightly from $38,658 as of December 31, 2011 to $44,593 as of September 30, 2012 from the proceeds of convertible debt. Total current assets increased by $476,661, from $274,919 as of December 31, 2011 to $751,580 as of September 30, 2012, primarily because of an increase in accounts receivable of $233,732 and an increase in prepaid expenses and other current assets of $215,513. Prepaid expenses are primarily advertising contracts to promote our Clotamin product. These same increases were primarily responsible for our increase in total assets. Cash Requirements We had cash available as of September 30, 2012 of $44,593. Based on our current revenues, cash on hand, and our current net monthly burn rate of approximately $150,000, we will need to continue to raise money from the issuance of equity and/or convertible debt to fund operations. Sources and Uses of Cash Operations Our net cash used in operating activities was ($1,412,279) for the nine months ended September 30, 2012, compared to net cash provided by operating activities of $61,989 for the nine months ended September 30, 2011. This increase is a result of increased operations as described earlier. For the nine months ended September 30, 2012, our net cash used in operating activities consisted primarily of our net loss of $1,854,847, offset by an accretion of debt discount of $171,717, change in fair value of embedded conversion derivative liabilities of $328,267, plus a decrease in accounts receivable of $233,732, decrease in prepaid expenses and other current assets of $215,513, and an increase in accounts payable and accrued liabilities of $444,003. Investments Our net cash used in investing activities was $89,190 for the nine months ended September 30, 2012, compared to $55,627 for the nine months ended September 30, 2011. For both periods our net cash used in investing activities consisted entirely of the purchase of property and equipment. Financing Our net cash provided by financing activities was $1,507,404 for the nine months ended September 30, 2012, compared to $19,351 for the nine months ended September 30, 2011. For the nine months ended September 30, 2012, our net cash provided by financing activities consisted of proceeds from convertible debt of $1,450,000 and net proceeds from lines of credit of $57,404. Off-balance sheet arrangements As of September 30, 2012, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital resources that are material to investors. Critical accounting policies and estimates Our critical accounting policies are set forth in Note 3 Summary of Significant Accounting Policies, to our financial statement footnotes. Recent accounting pronouncements We have evaluated recent pronouncements and do not expect their adoption to have a material impact on our financial position or statements. Results of Operations for the Year Ended December 31, 2011 compared to Year Ended December 31, 2010 Results of Operations Summary of Results of Operations Year Ended December 31, 2011 2010 Revenue $ 862,750 $ 75,305 Costs and Expenses: Cost of goods sold 453,553 9,255 General and administrative 313,826 59,576 Salaries and commissions 233,838 8,133 Professional fees 144,080 452 Total Operating Expenses 1,145,297 77,416 Operating Loss (282,547 ) (2,111 ) Other Expense 18,551 10,428 Interest expense (14,266 ) (7,217 ) Net loss $ (296,813 ) $ (9,328 ) Operating Loss; Net Loss Our net loss increased by $287,485, from ($9,328) to ($296,813), from the year ended 2010 compared to 2011. Our operating loss increased by $280,436, from ($2,111) to ($282,547) for the same period. Our losses increased even though our revenues increased by $787,445 from 2010 to 2011. The increase in operating loss and net loss compared to the prior year is primarily a result of our increase in expenses, especially our cost of goods sold (increased by $444,298), our general and administrative expenses (increased by $254,250), our salaries and commissions (increased by $225,705) and our professional fees (increased by $143,628). These changes in our revenues and expenses are detailed below. Revenue Our 2011 net revenue increased by $787,445, to $862,750 compared to $75,305 for the year ended December 31, 2010, primarily due to an increase in our sales of hard-to-find drugs, which was largely a result of additional licenses we received in 2011. On January 1, 2011, we had licenses to sell drugs in 10 states. As of December 31, 2011 we had licenses to sell drugs in 24 states. The more states we can sell into the greater number of purchasers, such as clinics, hospitals, etc. that we can access. For example, as of December 31, 2010, we had approximately six different entities to which we sold drugs, compared to 129 different entities as of December 31, 2011. These additional purchasers were the primary for our increase in sales. Currently, we expect to have licenses in approximately 40-45 states by December 31, 2012, which should lead to increased sales in 2012 compared to 2011. Notably, we had gross sales of $1.4 million and $425,000 for the years ended December 31, 2011 and 2011, respectively, but we did not recognize the portion of these gross sales we received from Healthrite Pharmaceuticals in the calculation of our net revenue since Healthrite was owned and controlled by Mackie Barch, our sole officer and director, and Healthrite bore most of the risk for the purchasing and selling of the drugs, with us acting more as a sales agent for Healthrite due to licensing restrictions. Recently, Healthrite notified us that due to the cost and effort to maintain a pharmaceutical license it has surrendered its pharmaceutical license and will no longer be selling pharmaceuticals, effective April 10, 2012. We do not expect this action to have a material impact on our business since we now have our own direct relationship with suppliers and resellers of hard-to-find drugs, but it will allow us to recognize all the revenue from our product sales rather than having a disparity between our gross sales and the net revenue we recognize since we will no longer be sourcing the drugs from a related party. Of our total net revenue of $862,750 for the year ended December 31, 2011, $244,897 of that net revenue was net revenue, related party, which was the revenue generated from the markup of the drugs we purchased from Healthrite during the latter half of 2011, and the remaining $617,853 was revenue generated primarily from the resale of hard-to-find drugs we purchased from third party vendors. As noted above, we purchase our hard-to-find drugs from a wide variety of small vendors depending on the particular hard-to-find drug that is being sought. Our current vendors are small, regional pharmaceutical wholesalers. No one vendor or hard-to-find drug represents a material amount of our revenue or business. Approximately 70% of our purchase orders are for under $1,000 each, so our business is a volume business and not reliant on one or even a few vendors or drugs. Cost of Goods Sold Our cost of goods sold is the direct costs attributable to the production of the operations that produce our revenues. In 2011 our cost of goods sold was $453,553, and was primarily related to product costs. In 2010 our cost of goods sold was $9,255, and was also primarily related to product costs. We believe our costs of goods sold will continue to increase as we increase our overall business and recognize increased product sales. As noted above, as we receive additional licenses, gain additional access to purchasing entities and increase our sales, our cost of sales will also increase. General and Administrative Expenses General and administrative expenses increased by $254,250, to $313,826 for the year ended December 31, 2011, compared to $59,576 for the year ended December 31, 2010. In 2011, our general and administrative expenses consisted primarily of shipping costs, costs for human resources, depreciation expense, costs of business licenses and permits, merchant services and bank fees, rent expense, and other general expenses, compared to 2010 when our general and administrative expenses consisted primarily of merchant services and bank fees, and other general expenses. The increase in our general and administrative expenses primarily resulted from the increase in shipping costs, costs for human resources, depreciation expense, costs of business licenses and permits and rent expense. Salaries and Commissions Our salaries and commissions for the year ended December 31, 2011 were $233,838, compared to $8,133 for the year ended December 31, 2010. For 2011, the majority of our salaries and commissions were paid as commissions to our sales force and $49,000 was paid to Mackie Barch, our sole officer and director. Professional Fees Our professional fees for the year ended December 31, 2011 were $144,080, compared to $452 for the year ended December 31, 2010. The significant increase in our professional fees was primarily due to increased professional fees we incurred for legal, accounting, and other consulting services due to our overall increase in business operations. Interest Expense Interest expense increased by $7,049, to ($14,266), and is primarily attributable to the interest expense on our line of credit and advances from related parties. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE We have no disclosure required by this item. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS The following table sets forth the names, ages, and biographical information of each of our current directors and executive officers, and the positions with us held by each person, and the date such person became a director or executive officer. Our executive officers are elected annually by the Board of Directors. The directors serve one-year terms until their successors are elected. The executive officers serve terms of one year or until their death, resignation or removal by the Board of Directors. Family relationships among any of the directors and officers are described below. Name Age Position(s) Mackie Barch 37 President, CEO, Secretary, and Director Eric Clarke 39 Chief Financial Officer Mackie Barch, age 37, is our President, Chief Executive Officer, Secretary, sole director, and co-founder of Healthcare Distribution Specialists, now known as Pharmagen Distribution, LLC, which is our wholly-owned subsidiary. Before launching PDS, Mr. Barch co-founded Global Nutritional Research LLC (GNR) in July 2007, which manufactures over-the-counter products for a specific disease based on Rx/OTC interaction, and continues to work with GNR but GNR currently has de minis assets and operations. The Company purchase products from GNR, and may continue to do so in the future. Prior to founding PDS and GNR, from late 2006 to 2007, Mr. Barch was involved in numerous financial and operational aspects of Global Pharmaceutical Sourcing (GPS). Prior to working for GPS, Mr. Barch was employed as Assistant Vice President in institutional equities at Friedman, Billings, & Ramsey (FBR), an investment bank and broker-dealer, from 2001 to 2006. During his career, Mr. Barch has participated in numerous equity offerings. Mr. Barch graduated the University of Colorado-Boulder with a BA in Economics. Mr. Barch is currently an elected official in the State of Maryland, serving as a City Council Member in Kensington, MD, and has been since his election in 2009. The Company determined that Mr. Barch s background with PDS and in the pharmaceutical and finance industries made him the ideal candidate for appointment to the board of directors and as an officer of the Company. Mr. Barch was also President of the National Blood Clot Alliance Chapter in Washington, D.C., hosting charity events to raise awareness about the prevalence of Thrombophilia and clot prevention. Eric Clarke, age 39, has served as our Chief Financial Officer since December 31, 2012. Mr. Clarke brings over 17 years of extensive health care and financial expertise. From January through August 2012, Mr. Clarke was pursuing personal opportunities. Beginning in September 2012 and until his appointment as the CFO, Mr. Clarke provided consulting services to us regarding our financial reporting requirements. From 2008 through 2011, Mr. Clarke served as an Assistant Vice President at MedStar Health, a $4 billion diversified health system in the Washington D.C. region. As the leader in charge of the Internal Audit function, Mr. Clarke oversaw all financial and operational audits, was instrumental in building an effective internal audit function, and reported to the Audit and Compliance Committee of Medstar Health. Prior to MedStar, from 2006 to 2008, Mr. Clarke served as the Managing Director in charge of the Washington D.C. Risk Management Practice for Accume Partners, a national professional services firm, providing expert advice and service in forensic accounting, SEC reporting, and Sarbanes-Oxley Compliance. Mr. Clarke has authored numerous presentations and articles in the accounting and compliance arena, as well as been featured in several publications, such as Compliance Week and Practical Accountant. Mr. Clarke is a member of the Virginia Society of Certified Public Accountants, holds a Master s Degree in Accounting from George Washington University and a Bachelor s Degree from Wheaton College. Family Relationships There are no family relationships among any of our officers, directors, or greater-than-10% shareholders. EXECUTIVE COMPENSATION Executive Compensation We currently have a written employment agreement with Mackie Barch, our Chief Executive Officer and sole director. All of our executives are at-will employees. Summary Compensation Table The following table sets forth information with respect to compensation earned by our Chief Executive Officer, President, and Chief Financial Officer for the fiscal years ended December 31, 2011, 2010 and 2009. Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation ($) All Other Compensation ($) Total ($) Mackie Barch (1) 2011 49,000 -0- -0- -0- -0- -0- -0- 49,000 CEO and President 2010 -0- -0- -0- -0- -0- -0- -0- -0- 2009 -0- -0- -0- -0- -0- -0- -0- -0- Scott Beaudette (2) 2011 20,000 -0- -0- -0- -0- -0- -0- 20,000 Former CEO 2010 20,000 -0- -0- -0- -0- -0- -0- 20,000 and President 2009 -0- -0- -0- -0- -0- -0- -0- -0- Eric Clarke (3) 2011 -0- -0- -0- -0- -0- -0- -0- -0- CFO 2010 -0- -0- -0- -0- -0- -0- -0- -0- 2009 -0- -0- -0- -0- -0- -0- -0- -0- (1) Mr. Beaudette resigned as an officer and director on February 13, 2012. Prior to his resignation, pursuant to his management agreement, Mr. Beaudette was to receive $5,000 per quarter. (2) On February 13, 2012, Mr. Barch was appointed as our President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director. As compensation for such services, Mr. Barch was to receive a monthly fee of $1,000. Compensation for Mr. Barch prior to February 13, 2012 includes amounts paid to Mr. Barch by PDS, our wholly-owned subsidiary. PDS has no formal agreement with Mr. Barch and during 2011 it paid Mr. Barch what it could afford at various times up through October 1, 2011, including $4,000 in June 2011, $5,000 in July 2011, $7,000 in August 2011,and $6,000 in September 2011, for a total of $22,000 through October 1, 2011. Starting on October 1, 2011, PDS paid Mr. Barch $9,000 per month for each of October 2011, November 2011 and December 2011. Beginning on January 1, 2012, PDS began paying Mr. Barch $7,000 every two weeks, but there is no agreement to cover this payment. On October 9, 2012, we entered into an employment agreement with Mr. Barch to pay him a salary of $170,000 per year. (3) Mr. Clarke was appointed as our Chief Financial Officer on December 31, 2012. Mr. Clarke does not have a written employment agreement, but is paid a salary of $150,000 per year. Director Compensation For the years ended December 31, 2011 and 2010, none of the members of our Board of Directors received compensation for his or her service as a director. We do not currently have an established policy to provide compensation to members of our Board of Directors for their services in that capacity. We intend to develop such a policy in the near future. Outstanding Equity Awards at Fiscal Year-End On June 18, 2012, our Board of Directors approved the Sunpeaks Ventures, Inc. 2012 Omnibus Stock Grant and Option Plan and set aside 40,000,000 shares of our common stock for issuance thereunder. Pursuant to the plan, officers, directors, key employees and certain consultants may be granted stock options (including incentive stock options and non-qualified stock options), restricted stock awards, unrestricted stock awards, or performance stock awards. As of the date of this Prospectus, we have not made any awards under the Plan. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of the date of this Prospectus, certain information with respect to our equity securities owned of record or beneficially by (i) each Officer and Director; (ii) each person who owns beneficially more than 10% of each class of our outstanding equity securities; and (iii) all Directors and Executive Officers as a group. Name and Address Common Stock Ownership(1) Percentage of Common Stock Ownership(2) Class A Preferred Stock Ownership(1) Percentage of Class A Preferred Stock Ownership(3) Percent of Total Voting Rights(5)(7) Mackie Barch (4)(9) 224,000,000 58.8 % 3,000,000 100.0 % 76.9 % Eric Clarke (8)(9) -0- - % -0- - % - % All Officers and Directors as a Group (2 Persons) 224,000,000 58.8 % 3,000,000 100 % 76.9 % (1) The number and percentage of shares beneficially owned is determined under rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table. (2) Based on 381,125,288 shares of common stock issued and outstanding as of January 18, 2013. (3) Based on 3,000,000 shares of Class A Preferred Stock issued and outstanding as of January 18, 2013. (4) Includes shares of common stock and Class A Preferred Stock held of record by Old Line Partners, LLC. Bethesda Holdings, LLC is the manager of Old Line Partners, LLC and has sole voting power over the shares. Mackie Barch is the sole member and manager of Bethesda Holdings, LLC. Bethesda may instruct Old Line to sell no more than 1% of the outstanding securities of Pharmagen, Inc. in an 90-day period and deliver the proceeds to Bethesda. (5) Class A Preferred Shares have 100:1 voting rights and 5:1 conversion rights to common stock. (6) Evelyn Quintero has voting power over the shares held by Whetu, Inc. (7) Calculated based on total outstanding votes of the Company, including 381,125,288 votes held by the holders of our common stock and 300,000,000 votes held by the holders of our Class A Preferred Shares, for a total of 684,174,069 votes. (8) Eric Clarke is the sole member and manager of Beauchamp Capital Holdings, LLC, which is a member of Old Line Partners, LLC. Beauchamp does not have any voting control over the shares held by Old Line Partners. Beauchamp may instruct Old Line to sell no more than 1% of the outstanding securities of Pharmagen, Inc. in an 90-day period and deliver the proceeds to Beauchamp. (9) Unless noted otherwise, the address is c/o Pharmagen, Inc., 9337 Fraser Ave., Silver Spring, MD 20910. The issuer is not aware of any person who owns of record, or is known to own beneficially, five percent or more of the outstanding securities of any class of the issuer, other than as set forth above. There are no classes of stock other than as set forth above. There are no current arrangements which will result in a change in control. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Our wholly-owned subsidiary, PDS, had an arrangement with Healthrite Pharmaceuticals, a specialty pharmacy owned by our sole officer and director, Mr. Barch. Pursuant to the arrangement Healthrite would purchase pharmaceutical products directly from manufacturers and then resell them to PDS. During the quarter ended June 2012, Healthrite notified us that due to the cost and effort to maintain a pharmaceutical license it has surrendered its pharmaceutical license and will no longer be buying and selling pharmaceuticals. During the years ended December 31, 2011 and 2010, PDS purchased $1.1 million and $425,000, respectively, of inventory from HealthRite, which was then resold to customers. During 2010 and the first half of 2011, we resold the drugs we purchased from Healthrite at the same price we purchased them, basically acting as the selling arm of Healthrite. This was done since we had certain licenses to sell products in states where Healthrite did not have licenses and it enabled us to get additional name recognition. Starting in mid 2011 we began marking up the product we purchased from Healthrite by 25% when we sold it to third-party purchasers. We do not expect Healthrite s decision to surrender its pharmaceutical license to have a material impact on our business. On June 14, 2011, PDS entered into an asset acquisition agreement with Global Nutritional Research LLC ( GNR ), a limited liability company in Maryland controlled by Mr. Justin Barch, the brother of Mackie Barch, one of our officers and director. Under the terms of the agreement, PDS acquired all assets, properties, goodwill, and other rights related to GNR in exchange for assuming all debts currently held by GNR. The agreement was formally ratified and signed by us and GNR on August 12, 2011. During the years ended December 31, 2011 and 2010, PDS, an entity controlled by Mackie Barch, one of our officers and director, loaned us $200,100 and $0, respectively, which was used to fund our operations. The $200,100 is proceeds PDS received from a loan from Eagle Bank. PDS charged us the interest Eagle Bank charged PDS for the loan, which was $5,446 for 2011, based on a variable interest rate that will not be less than 5.5% per annum or more than the maximum rate allowed by law. PDS did not charge us any additional interest on the loan other than what was charged to PDS by Eagle Bank. There is no agreement between us and PDS to evidence this loan. As a result we imputed interest expense of $5,866 and $0 on this loan during the years ended December 31, 2011 and 2010, respectively. For the years ended December 31, 2011 and 2010, (a) the largest aggregate amount of principal outstanding was $200,100 and $0, respectively, (b) the outstanding principal balance as of December 31, 2011 and 2010 was $200,100 and $0, respectively, and $200,100 as of September 30, 2012, (c) we paid an aggregate of $0 and $0, respectively, toward the outstanding principal amount, and (d) we imputed interest expense of $5,866 and $0, respectively, at an interest rate of 5.5% per annum. During December 31, 2011, Justin Barch, the brother of Mackie Barch, one of our officers and director, loaned us $75,000, which was used to fund our operations. The $75,000 is proceeds Justin Barch received from a loan from Eagle Bank. Justin Barch charged us the interest Eagle Bank charged Justin Barch for the loan, which was $420 for 2011, based on an interest rate of 6.5% per annum. Justin Barch did not charge us any additional interest on the loan other than what was charged to Justin Barch by Eagle Bank. There is no agreement between us and Justin Barch to evidence this loan. As a result we imputed interest expense of $420 on this loan during the year ended December 31, 2011. For the years ended December 31, 2011 and 2010, (a) the largest aggregate amount of principal outstanding was $75,000 and $0, respectively, (b) the outstanding principal balance as of December 31, 2011 and 2010 was $75,000 and $0, respectively, and $75,000 as of September 30, 2012, (c) we paid an aggregate of $0 and $0, respectively, toward the outstanding principal amount, and (d) we imputed interest expense of $420 and $0, respectively, at an interest rate of 6.5% per annum. Additionally, ICAPP, LLC, an entity controlled by Mackie Barch and that was originally set up to be a holding company, loaned PDS $998, interest free. This amount remains outstanding and is due on demand. For the years ended December 31, 2011 and 2010, (a) the largest aggregate amount of principal outstanding was $998 and $0, respectively, (b) the outstanding principal balance as of December 31, 2011 and 2010 was $998 and $0, respectively, and $998 as of September 30, 2012, (c) we paid an aggregate of $0 and $0, respectively, toward the outstanding principal amount, and (d) we imputed interest expense of $0 and $0, respectively, at an interest rate of 0% per annum. For 2011, the $100,647 owed to Healthrite for past drug purchases, the $200,100 owed on the loan from PDS, the $75,000 owed on the loan from Justin Barch, and the $998 owed to ICAPP, LLC, totals the $376,745 noted on our balance sheet as due to related party. During 2011, Mackie Barch, one of our officers and director, was paid by PDS, our wholly-owned subsidiary, for the services he provided to PDS. PDS has no formal agreement with Mr. Barch and during 2011 it paid Mr. Barch what it could afford at various times up through October 1, 2011, including $4,000 in June 2011, $5,000 in July 2011, $7,000 in August 2011,and $6,000 in September 2011, for a total of $22,000 through October 1, 2011. Starting on October 1, 2011, PDS paid Mr. Barch $9,000 per month for each of October 2011, November 2011 and December 2011. Beginning on January 1, 2012, PDS began paying Mr. Barch $7,000 every two weeks, but there is no agreement to cover this payment. On October 9, 2012, we entered into an employment agreement with Mackie Barch, our sole officer and director. Pursuant to the agreement, Mr. Barch will continue to serve as our Chief Executive Officer and Chairman of the Board. The agreement has a three (3) year term and will automatically renew for one (1) year periods unless we or Mr. Barch provide notice to the other at least ninety (90) days prior to the expiration of any term of the intention not to renew. Mr. Barch will be compensated in the amount of $170,000 per year for the duration of the agreement. In the event Mr. Barch is terminated without cause or resigns for good reason, he shall be entitled to receive payment of one (1) year of his salary to be made in accordance with our normal payroll cycle. Effective on December 31, 2012, Mackie Barch, in fulfillment of prior obligations to certain key employees and founders of PDS, transferred all of his equity interest in us to Old Line Partners, LLC. The sole manager of Old Line is Bethesda Holdings, LLC, of which Mr. Barch is the sole member and manager. Bethesda has all voting control over the securities owned by Old Line, and with certain minor exceptions, all power of disposition as well. See Security Ownership of Certain Beneficial Owner and Management. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Article 10 of our Articles of Incorporation provides that the corporation shall indemnify its directors, officers, employees, fiduciaries and agents to the fullest extent permitted under the Nevada Revised Statutes. Article VII of our bylaws provides that the corporation shall indemnify any person who was or is a party, or is threatened to be made a party, to an proceeding by reason of the fact that such person is or was a director, officer, employee, or other agent of the corporation, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding, if that person acted in good faith and in matter that person reasonably believed to be in the best interests of the corporation, and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of that person was unlawful. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the Act ) may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. AVAILABLE INFORMATION We are subject to the reporting requirements of the Securities Exchange Act of 1934. We have filed with the Securities and Exchange Commission a registration statement on Form S-1, together with all amendments and exhibits thereto, under the Securities Act of 1933 with respect to the common stock offered hereby. This Prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. Statements contained in this Prospectus as to the contents of any contract or other document referred to are not necessarily complete and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference. Copies of all or any part of the registration statement may be inspected without charge or obtained from the Public Reference Section of the Commission at 100 F Street, NE, Washington, DC 20549. The registration statement is also available through the Commission s web site at the following address: http://www.sec.gov. EXPERTS The audited financial statements of Pharmagen, Inc. (formerly Sunpeaks Ventures, Inc.) as of December 31, 2011 and 2010 and for the years then ended appearing in this Prospectus which is part of a registration statement have been so included in reliance on the report of M&K CPAS, PLLC, given on the authority of such firm as experts in accounting and auditing. INDEX TO FINANCIAL STATEMENTS Condensed Consolidated Balance Sheets as of September 30, 2012 (unaudited) and December 31, 2011 (audited) F-1 Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited) F-2 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011 F-3 Consolidated Statements of Stockholders Equity (Deficit) for the Nine Months Ended September 30, 2012 (unaudited) F-4 Notes to Financial Statements F-5 to F-17 Report of Independent Registered Public Accounting Firm F-18 Consolidated Balance Sheets as of December 31, 2011 and 2010 (audited) F-19 Consolidated Statements of Operations for the Years Ended December 31, 2011 and 2010 (audited) F-20 Consolidated Statements of Cash Flows for the Years Ended December 31, 2011 and 2010 (audited) F-21 Consolidated Statements of Stockholders Equity (Deficit) for the Years Ended December 31, 2011 and 2010 (audited) F-22 Notes to Financial Statements F-23 to F-35 YOU MAY RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR SALE OF COMMON STOCK MEANS THAT INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AFTER THE DATE OF THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THESE SHARES OF THE COMMON STOCK IN ANY CIRCUMSTANCES UNDER WHICH THE OFFER OR SOLICITATION IS UNLAWFUL. Dealer Prospectus Delivery Obligation. Until ___________________, 2013; all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers obligation to deliver a Prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. TABLE OF CONTENTS 80,000,000 SHARES PHARMAGEN, INC. ------------------------- PROSPECTUS ------------------------- _______________, 2013 Page Prospectus Summary 4
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+S-1/A 1 d497866ds1a.htm PRE-EFFECTIVE AMENDMENT NO. 3 TO FORM S-1 Pre-Effective Amendment No. 3 to Form S-1 Table of Contents As Filed with the Securities Exchange Commission on March 13, 2013 Registration Nos. 333-175678 and 333-175678-01 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. 3 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 STREAM EXCHANGE TRADED TRUST (Exact name of registrant as specified in its charter) Delaware 6799 27-6620981 (State of Organization) (Primary Standard Industrial Classification Number) (I.R.S. Employer Identification Number) STREAM S&P Market Neutral Commodity Fund c/o STREAM Exchange Traded Trust 787 Seventh Avenue New York, New York 10019 (212) 841-2000 (Address, including zip code, and telephone number including area code, of registrant s principal executive offices) M. Andrews Yeo BNP Paribas Quantitative Strategies, LLC 787 Seventh Avenue New York, New York 10019 (212) 841-2000 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Michael J. Schmidtberger, Esq. James C. Munsell, Esq. Sidley Austin llp 787 Seventh Avenue New York, New York 10019 Andrew Alter, Esq. Joseph A. Inzerillo, Esq. BNP Paribas Quantitative Strategies, LLC 787 Seventh Avenue New York, New York 10019 Approximate date of commencement of proposed sale to the public: As promptly as practicable after the effective date of this Registration Statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price Per Share Proposed Maximum Aggregate Offering Price1 Amount of Registration Fee2 STREAM S&P Market Neutral Commodity Fund Common Units of Beneficial Interest 25,000,000 $25.001 $625,000,000 $72,562.50 1 The proposed maximum aggregate offering has been calculated assuming that all Shares are sold at a price of $25 per Share. 2 The amount of the registration fee of the Shares is calculated in reliance upon Rule 457(o) under the Securities Act and using the proposed maximum aggregate offering price as described above. 25,000,000 Shares were registered and the registration fee of $72,562.50 in respect thereof was paid on July 20, 2011. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents EXPLANATORY NOTE This Pre-Effective Amendment No. 3 to the Registration Statement on Form S-1 of STREAM Exchange Traded Trust (the Trust ) and STREAM S&P Market Neutral Commodity Fund (the Fund , formerly known as, STREAM Enhanced Volatility Fund) is being filed, in part, to reflect the Fund s new investment strategy. Table of Contents COMMODITY FUTURES TRADING COMMISSION RISK DISCLOSURE STATEMENT YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT COMMODITY INTEREST TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION, RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR PARTICIPATION IN THE POOL. FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED TO THIS POOL AT PAGES 15-16 AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGES 17-18. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, AT PAGES 21 THROUGH 39. YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY BE EFFECTED. THIS POOL HAS NOT COMMENCED TRADING AND DOES NOT HAVE ANY PERFORMANCE HISTORY. THE POOL OPERATOR AND ITS TRADING PRINCIPALS HAVE LIMITED EXPERIENCE OPERATING OTHER POOLS AND TRADING OTHER ACCOUNTS. THE BOOKS AND RECORDS OF THE FUND WILL BE MAINTAINED AS FOLLOWS: ALL MARKETING MATERIALS WILL BE MAINTAINED AT THE OFFICES OF ALPS DISTRIBUTORS, INC., 1290 BROADWAY, SUITE 1100, DENVER, COLORADO 80203; TELEPHONE NUMBER (303) 623-2577; BASKET CREATION AND REDEMPTION BOOKS AND RECORDS ACCOUNTING AND CERTAIN OTHER FINANCIAL BOOKS AND RECORDS (INCLUDING FUND ACCOUNTING RECORDS, LEDGERS WITH RESPECT TO ASSETS, LIABILITIES, CAPITAL, INCOME AND EXPENSES, THE REGISTRAR, TRANSFER JOURNALS AND RELATED DETAILS) AND TRADING AND RELATED DOCUMENTS RECEIVED FROM FUTURES COMMISSION MERCHANTS WILL BE MAINTAINED BY THE BANK OF NEW YORK MELLON, 2 HANSON PLACE, 12TH FLOOR, BROOKLYN, NEW YORK 11217, TELEPHONE NUMBER (718) 315-4850. ALL OTHER BOOKS AND RECORDS OF THE FUND (INCLUDING MINUTE BOOKS AND OTHER GENERAL CORPORATE RECORDS, TRADING RECORDS AND RELATED REPORTS AND OTHER ITEMS RECEIVED FROM THE FUND S COMMODITY BROKERS) WILL BE MAINTAINED AT THE FUND S PRINCIPAL OFFICE, C/O BNP PARIBAS QUANTITATIVE STRATEGIES, LLC, 787 SEVENTH AVENUE, NEW Table of Contents SUMMARY (cont d) Pricing Information Available on NYSE Arca and Other Sources The following table lists NYSE Arca symbols and their meanings with respect to the Shares and the Index: Ticker Description CCRV Market price per Share on NYSE Arca CCRVIV Indicative intra-day value per Share CCRVNV End of day Net Asset Value per Share CCRVSO End of day Number of outstanding Shares SPDYALEP Intra-day and Index closing level as of close of business from the prior day The intra-day data in the above table will be published at least once every 15 seconds during each NYSE Arca Core Trading Session. The current market price per Share (symbol: CCRV ) (quoted in U.S. dollars) will be published continuously as trades occur during each NYSE Arca Core Trading Session on the consolidated tape by one or more major market data vendors and on the Managing Owner s website (on a delayed basis) at http://www.stream.bnpparibas.com, or any successor thereto. The intra-day indicative value per Share (symbol: CCRVIV ) (quoted in U.S. dollars) will be published by NYSE Arca at least once every 15 seconds during each NYSE Arca Core Trading Session by one or more major market data vendors and on the Managing Owner s website (on a delayed basis) at http://www.stream.bnpparibas.com, or any successor thereto. The most recent end-of-day Net Asset Value per Share (symbol: CCRVNV ) will be published by the Managing Owner as of the close of the NYSE Arca Core Trading Session or the last to close of the Futures Exchanges on which the Fund s Designated Contracts or Substitute Contracts (which are listed on futures exchanges other than the Futures Exchanges) are traded, whichever is later, on the consolidated tape by one or more major market data vendors and on the Managing Owner s website (on a delayed basis) at http://www.stream.bnpparibas.com, or any successor thereto. The intra-day level and the most recent end-of-day closing level of the Index (symbol: SPDYALEP ) will be published on Reuters page SPDYALEP and on Bloomberg page SPDYALEP<index> once every 15 seconds during each NYSE Arca Core Trading Session and as of the close of business on each Index Business Day, respectively, on Standard & Poor s (which serves as the Index Sponsor) website at http://us.spindices.com, or any successor thereto. The number of outstanding Shares (symbol: CCRVSO ) will be published as of the close of each NYSE Arca Core Trading Session on the consolidated tape by one or more major market data vendors and on the Managing Owner s website at http://www.stream.bnpparibas.com, or any successor thereto. Any adjustments made to the Index will be published on Standard & Poor s (which serves as the Index Sponsor) website at http://us.spindices.com, or any successor thereto. The Trust and the Fund are not issued, sponsored, endorsed, sold or promoted by NYSE Arca, and NYSE Arca makes no representation regarding the advisability of investing in such product. NYSE ARCA MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE S&P GSCI DYNAMIC ROLL ALPHA LIGHT ENERGY INDEX OR ANY DATA INCLUDED THEREIN. IN NO EVENT SHALL NYSE ARCA HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. CUSIP The Fund s CUSIP number is [05573R 205]. Risk Factors An investment in Shares is speculative and involves a high degree of risk. The summary risk factors set forth below are intended merely to highlight certain risks of the Fund. The Fund has particular risks that are set forth elsewhere in this Prospectus. The Fund has no operating history. Therefore, a potential investor does not have any performance history to serve as a factor for evaluating an investment in the Fund. Table of Contents The information in this Prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to completion, dated March 13, 2013 STREAM EXCHANGE TRADED TRUST STREAM S&P MARKET NEUTRAL COMMODITY FUND 25,000,000 Common Units of Beneficial Interest STREAM Exchange Traded Trust, which we refer to as the Trust, is organized in series as a Delaware statutory trust. As of the date of this Prospectus, the Trust consists of two series, one of which is the STREAM S&P Market Neutral Commodity Fund, or the Fund. The Fund will issue common units of beneficial interest, which we refer to as Shares, which represent units of fractional undivided beneficial interest in and ownership of the Fund. Shares may be purchased from the Fund only by certain qualified financial institutions called Authorized Participants, and only in one or more blocks of 40,000 Shares, called a Basket. Authorized Participants will purchase Shares from the Fund at the net asset value per Share as of the close of the NYSE Arca Core Trading Session or the last to close of the Futures Exchanges on which the Fund s Designated Contracts or Substitute Contracts (which are listed on futures exchanges other than the Futures Exchanges) are traded, whichever is later, on the creation order date. The Fund will offer Shares in Baskets to Authorized Participants continuously. The Form of Participant Agreement sets forth the terms and conditions on which Authorized Participants may create or redeem Baskets. The offering of Shares will terminate on the third anniversary of the registration statement of which this Prospectus is a part unless prior thereto a new registration statement is filed. The Shares will trade on NYSE Arca, Inc., which we refer to as NYSE Arca, under the symbol CCRV (quoted in U.S. dollars). The Fund will seek to track changes, whether positive or negative, in the level of the S&P GSCI Dynamic Roll Alpha Light Energy Excess Return Index, or the Index, over time. The Index is comprised of 2 sub-indices - the S&P GSCI Dynamic Roll Light Energy ER Index, or the Long Sub-Index, and the S&P GSCI Light Energy ER Index, or the Short Sub-Index. The Index aims to reflect the difference between the roll yield generated by the Long Sub-Index through a long exposure to the Designated Contracts of the Long Sub-Index and the roll yield generated by the Short Sub-Index through a short exposure to the Designated Contracts of the Short Sub-Index. The Index is intended to reflect a long/short, market-neutral investment strategy and is non-directional in nature because the Index will be exposed to the changes in the prices of both long and short futures positions on each of the Index Commodities comprising the Index. The exposure of the Index to the Long Sub-Index is rebalanced once per month and the exposure of the Index to the Short Sub-Index is rebalanced on each Index Business Day in accordance with the Index Methodology to enable the Index to maintain a neutral exposure to the commodity markets generally. As described on page 41 in the section Investment Objective The Fund and Effect of Leverage, the Managing Owner expects that the Fund s average leverage ratio may be approximately 1.8:1, based upon the historical closing levels of the Index. The Fund s leverage ratio may be either greater or less, depending upon market conditions. The Fund does not intend to outperform the Index. Rather, BNP Paribas Quantitative Strategies, LLC, a Delaware limited liability company, or the Managing Owner, will seek to cause the net asset value of the Fund to track the Index during periods in which the Index is flat or declining as well as when the Index is rising. Except when aggregated in Baskets, the Shares are not redeemable securities. The Shares are speculative securities and their purchase involves a high degree of risk. Before you decide whether to invest in the Fund, read this entire Prospectus carefully. YOU SHOULD CONSIDER ALL RISK FACTORS BEFORE INVESTING IN THE FUND. PLEASE REFER TO THE SECTION THE RISKS YOU FACE BEGINNING ON PAGE 21 OF THIS PROSPECTUS. Futures trading is volatile and even a small movement in market prices could cause large losses. The Managing Owner and its trading principals have managed one other commodity pool of this type, and therefore, there is a limited indication of their ability to manage investment vehicles such as the Fund. If the experience of the Managing Owner and its trading principals is not adequate or suitable to manage investment vehicles such as the Fund, the operations and performance of the Fund may be adversely affected. You could lose all or substantially all of your investment. The Fund will be subject to actual and potential conflicts of interest involving the Managing Owner, the Commodity Brokers, the Authorized Participants, the Initial Purchaser and the Affiliated Liquidity Provider, which we refer to as the BNP Affiliated Entities. Investors will pay fees in connection with their investment in Shares including asset-based fees of [-]% per annum of the Net Asset Value of the Fund, continuous offering fees and expenses of approximately [-]% per annum of the Net Asset Value of the Fund, and routine operational, administrative and other ordinary fees and expenses of up to [-]% per annum of the Net Asset Value of the Fund. Additional charges include brokerage commissions and fees expected to be approximately [-]% per annum of the Net Asset Value of the Fund. The actual amount of continuous offering fees and expenses and brokerage commissions and fees in any year or any part of any year may be greater. Fees and commissions are charged, and expenses are incurred, regardless of profitability and may result in depletion of assets and, as a result, losses to your investment. Because the Index is inherently leveraged, a relatively small movement in the closing levels of the Designated Contracts may result in greater changes in the Net Asset Value of the Fund, which may cause greater losses for the Fund. On [-], 2013, BNP Paribas Securities Corp., as the Initial Purchaser, subject to certain conditions, agreed to purchase 600,000 Shares, which comprise the initial Baskets, at a purchase price of $25.00 per Share ($1,000,000 per Basket), as described in the section Plan of Distribution. This price was determined arbitrarily inasmuch as the Shares have no inherent value prior to the commencement of the Fund s operations. The Initial Purchaser proposes to offer the Shares to the public at a per-Share offering price that will vary depending upon, among other factors, the market price of the Shares on NYSE Arca, the Net Asset Value per Share and the supply of and demand for the Shares at the time of offer. Shares offered by the Initial Purchaser at different times may have different offering prices. The Initial Purchaser will not receive from the Fund, the Managing Owner or any of their affiliates, any fee or other compensation in connection with its sale of Shares to the public. Authorized Participants may, from time-to-time offer to the public Shares from any Baskets they create. Shares offered to the public by Authorized Participants will be offered at a per Share offering price that will vary depending upon, among other factors, the market price of the Shares on NYSE Arca, the Net Asset Value per Share and the supply of and demand for the Shares at the time of offer. Shares initially comprising the same Basket but offered by Authorized Participants to the public at different times may have different offering prices. Authorized Participants will not receive from the Fund, the Managing Owner or any of their affiliates, any fee or other compensation in connection with their sale of Shares to the public. An Authorized Participant may receive commissions or fees from investors who purchase Shares through their commission or fee-based brokerage accounts with the Authorized Participant. For more information regarding items of compensation paid to FINRA members, please see the section Plan of Distribution on page 125. These securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities commission passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense. STREAM S&P Market Neutral Commodity Fund is not a mutual fund or any other type of Investment Company within the meaning of the Investment Company Act of 1940, as amended, and is not subject to regulation thereunder. THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT. The Shares are neither interests in nor obligations of any of the Managing Owner, the Trustee, the Initial Purchaser, any Authorized Participant or any of their respective affiliates. The Shares are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. [-], 2013 Table of Contents YORK, NEW YORK 10019; TELEPHONE NUMBER (212) 841-2000. SHAREHOLDERS WILL HAVE THE RIGHT, DURING NORMAL BUSINESS HOURS, TO HAVE ACCESS TO AND COPY (UPON PAYMENT OF REASONABLE REPRODUCTION COSTS) SUCH BOOKS AND RECORDS IN PERSON OR BY THEIR AUTHORIZED ATTORNEY OR AGENT. MONTHLY ACCOUNT STATEMENTS CONFORMING TO COMMODITY FUTURES TRADING COMMISSION (THE CFTC ) AND THE NATIONAL FUTURES ASSOCIATION (THE NFA ) REQUIREMENTS WILL BE POSTED ON THE MANAGING OWNER S WEBSITE AT WWW.STREAM.BNPPARIBAS.COM. ADDITIONAL REPORTS MAY BE POSTED ON THE MANAGING OWNER S WEBSITE IN THE DISCRETION OF THE MANAGING OWNER OR AS REQUIRED BY REGULATORY AUTHORITIES. THERE WILL SIMILARLY BE DISTRIBUTED TO SHAREHOLDERS, NOT MORE THAN 90 DAYS AFTER THE CLOSE OF THE FUND S FISCAL YEAR, CERTIFIED AUDITED FINANCIAL STATEMENTS AND (IN NO EVENT LATER THAN MARCH 15 OF THE IMMEDIATELY FOLLOWING YEAR) THE TAX INFORMATION RELATING TO SHARES OF THE FUND NECESSARY FOR THE PREPARATION OF SHAREHOLDERS ANNUAL FEDERAL INCOME TAX RETURNS. THIS PROSPECTUS DOES NOT INCLUDE ALL OF THE INFORMATION OR EXHIBITS IN THE REGISTRATION STATEMENT OF THE TRUST. YOU CAN READ AND COPY THE ENTIRE REGISTRATION STATEMENT AT THE PUBLIC REFERENCE FACILITIES MAINTAINED BY THE SECURITIES AND EXCHANGE COMMISSION (THE SEC ) IN WASHINGTON, D.C. THE FUND WILL FILE PERIODIC, QUARTERLY AND ANNUAL REPORTS WITH THE SEC. YOU CAN READ AND COPY THESE REPORTS AT THE SEC PUBLIC REFERENCE FACILITIES IN WASHINGTON, D.C. PLEASE CALL THE SEC AT 1-800-SEC-0330 FOR FURTHER INFORMATION. THE FILINGS OF THE TRUST ARE POSTED AT THE SEC WEBSITE AT HTTP://WWW.SEC.GOV. REGULATORY NOTICES NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST, THE FUND, THE BNP AFFILIATED ENTITIES, AUTHORIZED PARTICIPANTS OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO SELL OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY OFFER, SOLICITATION, OR SALE OF THE SHARES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION, OR SALE IS NOT AUTHORIZED OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER, SOLICITATION, OR SALE. AUTHORIZED PARTICIPANTS MAY BE REQUIRED TO DELIVER A PROSPECTUS WHEN TRANSACTING IN SHARES. SEE THE SECTION PLAN OF DISTRIBUTION. S&P AND STANDARD & POOR S ARE REGISTERED TRADEMARKS OF STANDARD & POOR S FINANCIAL SERVICES LLC. S&P GSCI IS A REGISTERED SERVICE MARK AND TRADEMARK OF S&P. Table of Contents SUMMARY (cont d) Past performance, when available, is not necessarily indicative of future results. All or substantially all of an investment in the Shares could be lost. The trading activities of the Fund take place in very volatile markets that may be subject to sudden and rapid changes. Consequently, all or substantially all of your investment in the Shares could be lost. The Index aims to be market neutral through its exposure to both the Long Sub-Index and the Short Sub-Index, which are expected to be highly correlated to each other. This results in the Index being inherently leveraged. The Fund s objective is to seek to track the Index and it will take long and short positions in the Designated Contracts underlying the Long Sub-Index and the Short Sub-Index and the total notional value may be greater than the Fund s Net Asset Value. Investors should understand that certain factors could cause the correlation between the Long Sub-Index and the Short Sub-Index to decrease or to become negatively correlated, possibly causing greater changes in the Net Asset Value of the Fund, which may cause greater losses for the Fund. The Fund is subject to the fees and expenses described herein (in addition to the amount of any commissions charged by the investor s broker in connection with an investor s purchase or sale of Shares) and will be successful only if a certain amount of positive performance is achieved. The Managing Owner was formed to be the managing owner of investment vehicles such as the Trust and the Fund. The Fund has no past performance. The Managing Owner and its trading principals have managed one other commodity pool of this type. Therefore there is a limited indication of their ability to manage investment vehicles such as the Trust or the Fund. If the experience of the Managing Owner and its trading principals is not adequate or suitable to manage investment vehicles such as the Trust or the Fund, the operations and performance of the Trust or the Fund may be adversely affected. Because the Fund s portfolio turnover rate is expected to be high due to holding both long and short futures contracts, daily rebalancing of the Short Sub-Index, leverage, and Index and/or market volatility, the Fund will incur additional brokerage costs, operating costs and may generate increased taxable capital gains, which, in turn, would adversely affect the value of your Shares. The Fund will be subject to fees and expenses in the aggregate amount of approximately [-]% per annum as described herein. The Fund will be successful only if its annual returns from its trading, plus its annual interest income from its holdings of cash, U.S. Treasury bonds, U.S. Treasury bills, U.S. government securities and related securities (which are direct obligations of or obligations guaranteed as to principal or interest by the United States, or securities issued or guaranteed by corporations in which the United States has a direct or indirect interest which have been designated as exempted securities pursuant to section 3(a)(12) of the Securities Exchange Act of 1934), exceed these fees and expenses. We refer to the Fund s holdings of cash, U.S. Treasury bonds, U.S. Treasury bills, U.S. government securities and related securities (which are direct obligations of or obligations guaranteed as to principal or interest by the United States, or securities issued or guaranteed by corporations in which the United States has a direct or indirect interest which have been designated as exempted securities pursuant to section 3(a)(12) of the Securities Exchange Act of 1934) collectively as the Cash Instruments. The current holdings of Cash Instruments will earn an interest rate of [-]% as of [ [-] , 2013]. Therefore, the Fund will be required to earn approximately [-]% per annum, or $[-] per annum per Share at $25.00 as the Net Asset Value per Share, in order for an investor to break-even on an investment during the first twelve months of an investment. As of the date of this Prospectus, the CFTC and commodity exchange rules impose speculative position limits and other position limitations, as applicable, on market participants trading in the Index Commodities. Because the Fund is subject to these position limits, the Fund s ability to issue new Baskets or to reinvest income in additional Designated Contracts corresponding to the Index Commodities may be limited to the extent that these activities would cause the Fund to exceed the applicable position limits (or if a Table of Contents [Page left blank intentionally] Table of Contents SUMMARY (cont d) price limit is in effect on a Designated Contract during the last 30 minutes of its regular trading session), unless the Fund first trades Cleared Swaps (as defined below), and then, if applicable, Substitute Contracts (as defined below) and/or Alternative Financial Instruments (as defined below) in addition to and as a proxy for the Designated Contracts on the Index Commodities. These limitations and the use of first Cleared Swaps, and then, if applicable, Substitute Contracts and/or Alternative Financial Instruments in addition to and as a proxy for the Designated Contracts on the Index Commodities may affect the correlation between changes in the Net Asset Value per Share and changes in the level of the Index, and the correlation between the market price per Share on NYSE Arca and the Net Asset Value per Share. Fees and commissions are charged regardless of profitability. This may result in depletion of the Fund s assets and losses to your investment. There can be no assurance that an investment in the Shares will achieve profits or avoid losses, significant or otherwise. Performance of the Fund may not track the Index during particular periods or over either the short or long term. Certain potential conflicts of interest exist between the Managing Owner and its affiliates and the shareholders of the Fund, or the Shareholders. For example, because the Managing Owner and the Commodity Brokers (as defined below) are both subsidiaries of BNP Paribas, the Managing Owner has a disincentive to replace the Commodity Brokers. The Commodity Brokers may have a conflict of interest between their execution of trades for the Fund and for their other customers. More specifically, the Commodity Brokers will benefit from executing orders for other clients, whereas the Fund may be harmed to the extent that the Commodity Brokers have fewer resources to allocate to the Fund s accounts due to the existence of such other clients. General order taking by the Commodity Brokers or proprietary trading by the principals and/or affiliates of the Managing Owner and the Commodity Brokers may create conflicts of interest from time-to-time. General order taking or proprietary trades, as applicable, may cause either the principals and/or affiliates of the Commodity Brokers or the Managing Owner to take a position that is opposite of that of the Fund or may compete with the Fund for certain positions within the marketplace. See the section Conflicts of Interest for a more complete disclosure of various conflicts. Although the Managing Owner has considered various conflicts and has established formal procedures designed to resolve these conflicts equitably, there may be additional conflicts that arise because the Managing Owner has not established formal procedures to resolve all potential conflicts of interest. Consequently, investors may be dependent on the good faith of the respective parties subject to such conflicts to resolve them equitably. Although the Managing Owner attempts to monitor these conflicts, it is extremely difficult, if not impossible, for the Managing Owner to ensure that these conflicts will not, in fact, result in adverse consequences to the Fund or the Net Asset Value of the Shares and ultimately the market price of the Shares. There are certain tax risks associated with the offering, including the risk that the Fund could be treated as a corporation for federal income tax purposes, which may substantially reduce the value of your Shares. Because each Shareholder will receive a tax report on Schedule K-1, a Shareholder may incur additional fees and expenses if the Shareholder engages a tax expert to assist in the preparation of the Shareholder s tax returns. The Trustee
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001499275_groovy_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001499275_groovy_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..7eb986bf504bcd56cc7e6d34c6a54dc35e76a261
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing in the common stock of Santo Mining Corp. (referred to herein as the Company, we, our, and us ). You should carefully read the entire Prospectus, including Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and the accompanying financial statements and notes before making an investment decision. Business Overview Santo Mining Corp. is a company which acquires various metallic exploration concession applications in the Dominican Republic and royalty agreements in Mexico for the purpose of exploration and extraction. We target near-term production opportunities in the Dominican Republic and Mexico. Our vision is to define deposits and extract metals from both alluvial deposits that require minimal processing and bulk-tonnage, open-pit oxide and sulfide gold deposits where poly-metallic ores with economic concentrations of precious and base metals may be extracted and transported to local or offshore processing plants and refineries. The Company plans to combine rapid exploration methodology with innovative operational and logistical approaches to ensure the efficient and effective extraction of gold and other metals in the future. This swift mobilization and on-site sampling analysis capability was developed to drive growth and value in the near and long terms. Our metallic exploration concession applications are 100% owned, and lie in the core of the mineral rich Hispaniola Gold-Copper Back-Arc. Recent Developments Equity Enhancement Program with Hanover Holdings I, LLC Common Stock Purchase Agreement On June 20, 2013, which we refer to as the Closing Date, we entered into the Purchase Agreement with Hanover. The Purchase Agreement provides that, upon the terms and subject to the conditions set forth therein, Hanover is committed to purchase up to $16,000,000, which we refer to as the Total Commitment, worth of the Company s common stock, which we refer to as the Shares, over the 36-month term of the Purchase Agreement. From time to time over the term of the Purchase Agreement, commencing on the trading day immediately following the date on which the initial registration statement is declared effective by the Securities and Exchange Commission, or the Commission, as further discussed below, the Company may, in its sole discretion, provide Hanover with draw down notices, each a Draw Down Notice, to purchase a specified dollar amount of Shares, or the Draw Down Amount,over a 10 consecutive trading day period commencing on the trading day specified in the applicable Draw Down Notice, or the Pricing Period, with each draw down subject to the limitations discussed below. The maximum amount of Shares requested to be purchased pursuant to any single Draw Down Notice cannot exceed 300% of the average daily trading volume of the Company s common stock for the five trading days immediately preceding the date of the Draw Down Notice, or the Maximum Draw Down Amount. Once presented with a Draw Down Notice, Hanover is required to purchase a pro rata portion of the applicable Draw Down Amount on each trading day during the applicable Pricing Period on which the daily volume weighted average price for the Company s common stock, or the VWAP, equals or exceeds an applicable floor price, or the Floor Price, equal to the product of (i) 0.70 and (ii) the VWAP over the 10 trading days immediately preceding the date the Draw Down Notice is delivered, subject to adjustment for any stock splits, stock combinations, stock dividends, recapitalizations and other similar transactions. If the VWAP falls below the applicable Floor Price on any trading day during the applicable Pricing Period, the Purchase Agreement provides that Hanover will not be required to purchase the pro rata portion of the applicable Draw Down Amount allocated to that trading day. The per share purchase price for the Shares subject to a Draw Down Notice shall be equal to 92.5% of the arithmetic average of the five lowest VWAPs that equal or exceed the applicable Floor Price during the applicable Pricing Period; provided, however, that if the VWAP does not equal or exceed the applicable Floor Price for at least five trading days during the applicable Pricing Period, then the per share purchase price shall be equal to 92.5% of the arithmetic average of all VWAPs that equal or exceed the applicable Floor Price during such Pricing Period. Each purchase pursuant to a draw down shall reduce, on a dollar-for-dollar basis, the Total Commitment under the Purchase Agreement. The Company is prohibited from issuing a Draw Down Notice if (i) the amount requested in such Draw Down Notice exceeds the Maximum Draw Down Amount, (ii) the sale of Shares pursuant to such Draw Down Notice would cause the Company to issue or sell or Hanover to acquire or purchase an aggregate dollar value of Shares that would exceed the Total Commitment, or (iii) the sale of Shares pursuant to the Draw Down Notice would cause the Company to sell or Hanover to purchase an aggregate number of shares of the Company s common stock which would result in beneficial ownership by Hanover of more than 4.99% of the Company s common stock (as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder). The Company cannot make more than one draw down in any Pricing Period and must allow 24 hours to elapse between the completion of the settlement of any one draw down and the commencement of a Pricing Period for any other draw down. Hanover has agreed that during the term of the Purchase Agreement, neither Hanover nor any of its affiliates will, directly or indirectly, engage in any short sales involving the Company s securities or grant any option to purchase, or acquire any right to dispose of or otherwise dispose for value of, any shares of the Company s common stock or any securities convertible into or exercisable or exchangeable for any shares of the Company s common stock, or enter into any swap, hedge or other similar agreement that transfers, in whole or in part, the economic risk of ownership of any shares of the Company s common stock. Except as disclosed below with respect to the Initial Commitment Shares and Additional Commitment Shares (each term as defined below), Hanover will not be prohibited from selling any of the shares of the Company s common stock that it owns or that it is obligated to purchase under a pending Draw Down Notice. The Purchase Agreement contains customary representations, warranties and covenants by, among and for the benefit of the parties. The Purchase Agreement may be terminated at any time by the mutual written consent of the parties. Unless earlier terminated, the Purchase Agreement will terminate automatically on the earliest to occur of (i) the first day of the month next following the 36-month anniversary of the date on which the initial registration statement is declared effective by the Commission, (ii) the date on which Hanover purchases the Total Commitment worth of common stock under the Purchase Agreement and (iii) the date on which the Company s common stock ceases to be listed or quoted on a Trading Market (as defined in the Purchase Agreement). Under certain circumstances set forth in the Purchase Agreement, the Company and Hanover each may terminate the Purchase Agreement on one trading day s prior written notice to the other. Additionally, prior to the Closing Date, Hanover deposited $90,000, as an Administrative Fee, into an escrow account, which has been disbursed to the Company. The Company paid to Hanover a commitment fee equal to $249,450 in the form of 1,690,484 restricted shares of the Company s common stock, or the Initial Commitment Shares. The Initial Commitment Shares, together with the Additional Commitment Shares (as defined below), will be registered for resale in the Registration Statement, as discussed below, and are subject to a dribble out agreement between the Company and Hanover, whereby Hanover has agreed to sell no more than one-tenth of the Initial Commitment Shares and the Additional Commitment Shares, on a pro-rata basis, during the 10-week period immediately following the effective date of the initial registration statement; provided, however, that if the VWAP falls below $0.10 for any trading day during such 10-week period, the dribble out will automatically cease to apply. The Purchase Agreement also provides for indemnification of Hanover and its affiliates in the event that Hanover incurs losses, liabilities, obligations, claims, contingencies, damages, costs and expenses related to a breach by the Company of any of its representations and warranties under the Purchase Agreement or the other related transaction documents or any action instituted against Hanover or its affiliates due to the transactions contemplated by the Purchase Agreement or other transaction documents, subject to certain limitations. The Company agreed to pay up to $10,000 of reasonable attorneys' fees and expenses incurred by Hanover in connection with the preparation, negotiation, execution and delivery of the Purchase Agreement and related transaction documentation. Further, if the Company issues a Draw Down Notice and fails to deliver the shares to Hanover on the applicable settlement date, and such failure continues for 10 trading days, the Company agreed to pay Hanover, in addition to all other remedies available to Hanover under the Purchase Agreement, an amount in cash equal to 2.0% of the purchase price of such shares for each 30-day period the shares are not delivered, plus accrued interest. Registration Rights Agreement In connection with the execution of the Purchase Agreement, on the Closing Date, the Company and Hanover also entered into a registration rights agreement dated as of the Closing Date, or the Registration Rights Agreement. Pursuant to the Registration Rights Agreement, the Company has agreed to file an initial registration statement, or the Registration Statement, with the Commission to register an agreed upon number of Shares, which shall not exceed 1/3 of the number of shares of the Company's common stock held by non-affiliates of the Company, on or prior to July 1, 2013, or the Filing Deadline, and have it declared effective at the earlier of (A) the 30th calendar day after the execution of the Addendum, defined below and (B) the fifth business day after the date the Company is notified by the Commission that such Registration Statement will not be reviewed or will not be subject to further review, or the Effectiveness Deadline. If the initial Registration Statement is not declared effective by the Effectiveness Deadline, the Company is required to issue to Hanover additional shares of the Company s common stock equal to the quotient obtained by dividing (a) $83,750 by (b) the arithmetic average of the VWAPs over the 10 trading day period immediately preceding the Effectiveness Deadline, rounded up to the nearest whole share, or the Additional Commitment Shares. The initial Registration Statement was not declared effective by the Effectiveness Deadline, and on August 14, 2013, the Company and Hanover executed an Addendum to the Common Stock Purchase Agreement, or the Addendum, pursuant to which the Company agreed to issue 536,172 restricted shares of the Company s common stock on the date of the agreement, and an additional 536, 171 restricted shares of the Company s common stock if this Registration Statement is not deemed effective within thirty (30) calendar days from the execution of the Addendum, or the Revised Effectiveness Deadline. We are registering the Additional Commitment Shares in the Registration Statement of which this Prospectus is a part. If at any time all of the Registrable Securities (as defined in the Registration Rights Agreement) are not covered by the initial Registration Statement, the Company has agreed to file with the Commission one or more additional Registration Statements so as to cover all of the Registrable Securities not covered by such initial Registration Statement, in each case, as soon as practicable, but in no event later than the applicable filing deadline for such additional Registration Statements as provided in the Registration Rights Agreement. The Company also agreed, among other things, to indemnify Hanover from certain liabilities and fees and expenses of Hanover incident to the Company s obligations under the Registration Rights Agreement, including certain liabilities under the Securities Act . Hanover has agreed to indemnify and hold harmless the Company and each of its directors, officers and persons who control the Company against certain liabilities that may be based upon written information furnished by Hanover to the Company for inclusion in a registration statement pursuant to the Registration Rights Agreement, including certain liabilities under the Securities Act. Termination Agreement On March 11, 2013, the Company entered into a common stock purchase agreement, or the Original Purchase Agreement and a registration rights agreement, or the Original Registration Rights Agreement and, together with the Original Purchase Agreement, the Original Agreements with Hanover whereby the Hanover was to purchase up to $16,000,000 of the Company s common stock. As a result of comments received from the Commission with respect to the registration statement filed by the Company in connection with the transactions contemplated by the Original Agreements, the Company and Hanover entered into a termination agreement, dated June 20, 2013, or the Termination Agreement, to cancel the Original Agreements all of the transactions contemplated thereby.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001510518_genufood_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001510518_genufood_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..48605d94962de30f4052ae239341a1469be4e693
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001510518_genufood_prospectus_summary.txt
@@ -0,0 +1,7914 @@
+PROSPECTUS
+ 
+ GENUFOOD ENERGY ENZYMES CORP.
+ 
+
+ 6,000,000 SHARES
+
+COMMON STOCK
+ 
+
+ This prospectus relates to the resale of up to 6,000,000 shares of our common stock, par value $0.001 per share, by Southridge Partners II, LP ( Southridge ), which are Put Shares that we will put to Southridge pursuant to the Purchase Agreement. Southridge may also be referred to in this document as the Selling Security Holder.
+ 
+
+ The Purchase Agreement with Southridge provides that Southridge is committed to purchase up to $20 million of our common stock. We may draw on the facility from time to time, as and when we determine appropriate in accordance with the terms and conditions of the Purchase Agreement.
+ 
+
+ The Put Shares included in this prospectus represent a portion of the shares issuable to Southridge under the Purchase Agreement. This portion was calculated as approximately 33% of the Company s public float as of October 31, 2013.
+ 
+ Southridge is an underwriter within the meaning of the Securities Act in connection with the resale of our common stock under the Purchase Agreement. No other underwriter or person has been engaged to facilitate the sale of shares of our common stock in this offering. This offering will terminate 24 months after the registration statement to which this prospectus is made a part is declared effective by the SEC. Southridge will pay us 92% of the lowest closing price of our common stock for the five trading days immediately following the clearing date associated with the applicable Put Notice.
+ 
+ We will not receive any proceeds from the sale of these shares of common stock offered by Selling Security Holder. However, we will receive proceeds from the sale of our Put Shares under the Purchase Agreement. The proceeds will be used for working capital or general corporate purposes. We will bear all costs associated with this registration.
+ 
+ Our common stock is quoted on the OTCQB under the symbol GFOO. The shares of our common stock registered hereunder are being offered for sale by Selling Security Holders at prices established on the OTCBB during the term of this offering. On October 31, 2013, the closing price of our common stock was $0.05 per share. These prices will fluctuate based on the demand for our common stock
+ 
+
+ INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE RISK FACTORS IN THIS PROSPECTUS BEGINNING ON PAGE 10 FOR A DISCUSSION OF INFORMATION THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN OUR SECURITIES.
+ 
+
+ NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
+ 
+
+ You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information from that contained in this prospectus. Southridge is offering to sell and seeking offers to buy shares of our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy the securities in any circumstances under which the offer or solicitation is unlawful. Neither the delivery of this prospectus nor any distribution of securities in accordance with this prospectus shall, under any circumstances, imply that there has been no change in our affairs since the date of this prospectus.
+ 
+
+ We will receive no proceeds from the sale of the shares of common stock sold by Southridge. However, we will receive proceeds from the sale of securities pursuant to our exercise of the Put Right.
+ --------------------
+ The Date of This Prospectus Is: November__, 2013
+ 
+ 3 
+ 
+
+ 
+ Table of Contents
+ 
+
+ 
+ PAGE 
+
+ Summary 
+ Risk Factors 
+ Forward-Looking Statements 
+ Use of Proceeds 
+ Determination of Offering Price 
+ Dilution 
+ Selling Shareholders 
+ Plan of Distribution 
+ 
+ Description of Securities 
+ Interest of Named Experts and Counsel 
+ Description of Business 
+ Legal Proceedings 
+ Market for Common Equity and Related Stockholder Matters 
+ Plan of Operations 
+ Changes in and Disagreements with Accountants 
+ Available Information 
+ Directors, Executive Officers, Promoters and Control Persons 
+ Executive Compensation 
+ Security Ownership of Certain Beneficial Owners and Management 
+ Certain Relationships and Related Transactions 
+ Disclosure of Commission Position of Indemnification for Securities Act Liabilities 
+ Financial Statements 
+ 
+ 
+
+ 4 
+ 
+
+ Summary
+ Prospective investors are urged to read this prospectus in its entirety.
+ 
+
+ We are a development stage company. From inception to June 30, 2013, we have earned revenues of $303,191 from the sale of some of our products. We have minimal assets, and have incurred losses since inception.
+ 
+
+ We are a marketing, distribution and export company specialized in enzyme products for human and animal consumption. Enzyme is a catalyst responsible for biochemical reactions in living things (including animals, plants, and microorganisms), synthesis, decomposition, oxidation, transfer and isomerization. Isomerization is the chemical process by which one molecule is transferred into another molecule which has exactly the same atoms, but the atoms are rearranged. The biotic phenomena would stop without enzymes, or the lack of it, or with its destruction. DNA would undergo a drastic change, unusual illness would occur and metabolism would become abnormal, among others. Thus, we can conclude that Biotic phenomena are testimonies of enzyme s activities. Enzyme is actually a complex globule protein. It reacts optimally under body temperature. Reaction is many times faster with added enzymes. Therefore, regular consumption of enzyme is good for our well-being. In fact it has been categorized under GRAS (Generally Regarded as Safe) by the Food and Drug Administration. Our body loses enzymes as we grow old. It has been proven that many chronic, hereditary diseases and functional imbalance are caused by the deficiency of certain enzymes, for example, lipase (fat enzyme) deficiency causes hepatic diseases, diabetes and Vitamin A deficiency. Amylase (carbohydrate enzyme) deficiency results in liver diseases and gastro enteric diseases. Enzyme is neither a drug, medicine nor a herb. It is extracted from fruits and vegetables. It can be a natural complex enzyme, plant-based complex enzyme or microbial enzyme. It is for the body cell. It is the Cell Activator. A Cell Activator refers to the enzymes that catalyze and regulate every biochemical reaction that occurs within the human body, making them essential to cellular function and health. Human beings and animal will die without enzymes. 
+ 
+
+ We have recently begun to market and export a limited number of our enzyme products. We began marketing our products in Taiwan in September of 2010 and in Singapore and Sri Lanka in June of 2011. We have generated total revenues of $303,191 from inception to June 30, 2013 from the sale of some of our products. Theses revenues were generated entirely in Taiwan and entirely through our sole distributor in Taiwan, Taiwan Cell Energy Enzymes Corp. 
+ 
+
+ We believe that we will be able to successfully commence full operations within the next 12 months as we already have key agreements in place with manufacturers of our enzyme products, as well as sufficient cash resources to begin operations (we had approximately $875,521 in our bank accounts as of October 31, 2013). Our initial target market is Asia, which includes: Taiwan, China, Hong Kong, Macau, Singapore, Malaysia, Thailand and Sri Lanka. Our goal is to appoint a Country Sole Distributor in each country, each distributing our enzyme products for human consumption, animal consumption and special outlet category
+ 
+ We have minimal revenues, have achieved significant losses since inception, have had only limited operations and have been issued a going concern opinion by our auditors.
+ 
+
+ We were incorporated on June 21, 2010 under the laws of the state of Nevada. Our principal office is located at Two Allen Center, 1200 Smith Street, Suite 1600, Houston, Texas 77002. Our telephone number is (713) 353-8834.
+ 
+ 
+ 5 
+ 
+ ABOUT THIS OFFERING
+ 
+
+ This offering relates to the resale of up to an aggregate of $20,000,000 in put shares ( Put Shares ) that we may put to Southridge pursuant to the Equity Purchase Agreement. Assuming the resale of all 6,000,000 shares offered in this prospectus as Put Shares, this would constitute approximately 1.5% of our outstanding common stock. It is likely that the number of shares offered in this registration statement is insufficient to allow us to receive the full amount of proceeds under the Equity Purchase Agreement.
+ 
+ At the closing price of our common stock as reported on the OTCBB on October 31, 2013 of $0.05 per share, we will be able to receive up to $300,000 in gross proceeds, assuming the sale of the entire 6,000,000 Put Shares being registered hereunder pursuant to the Equity Purchase Agreement. We would be required to register 394,000,000 additional shares to obtain the remaining balance of $19,700,000 under the Equity Purchase Agreement at the closing price of our common stock as reported on the OTCBB on October 31, 2013 of $0.05 per share.
+ 
+ The amount of $20,000,000 was selected based on our potential use of funds over the effective time period for the acquisition of a small factory in Singapore in order to package our ProCellax range of enzymes products and for working capital purposes. Our ability to receive the full amount is largely dependent on the daily dollar volume of stock traded during the effective period. Based strictly on the current daily trading dollar volume up to October 2013, we believe it is unlikely that we will be able to receive the entire $20,000,000. We are not dependent on receiving the full amount to execute our business plan and can still progress with our business without the acquisition of the factory. The factory will just allow us to lower our costs. 
+ 
+
+ On October 17, 2013, we entered into the Equity Purchase Agreement with Southridge pursuant to which, we have the right, for a two year period, commencing on the date of the Equity Purchase Agreement (but not before the date which the SEC first declares effective this registration statement) (the Commitment Period ), of which this prospectus forms a part, registering the resale of the Put Shares by Southridge, to resell the Put Shares purchased by Southridge under the Equity Purchase Agreement. As a condition for the execution of the Equity Purchase Agreement, we issued Southridge a promissory note in the principal amount of $125,000, maturing on May 31, 2014, as a commitment fee.
+ 
+ In order to sell shares to Southridge under the Equity Purchase Agreement, during the Commitment Period, the Company must deliver to Southridge a written put notice on any trading day (the Put Date ), setting forth the dollar amount to be invested by Southridge (the Put Notice ). For each share of our common stock purchased under the Equity Purchase Agreement, Southridge will pay 92 percent of the lowest closing bid price ( Closing Price ) of any trading day during the five trading days immediately following the date on which we have deposited an estimated amount of Put Shares to Southridge s brokerage account in the manner provided by the Equity Purchase Agreement (the Valuation Period ). We may, at our sole discretion, issue a Put Notice to Southridge and Southridge will then be irrevocably bound to acquire such shares.
+ 
+ The Equity Purchase Agreement provides that the number of Put Shares to be sold to Southridge shall not exceed the number of shares that when aggregated together with all other shares of our common stock which Southridge is deemed to beneficially own, would result in Southridge owning more than 9.99% of our outstanding common stock. 
+ 
+ In the event that during a Valuation Period for any Put Notice, the Closing Price on any trading day falls more than twenty percent (20%) below the Floor Price, then for each such trading day we shall be under no obligation to sell and Southridge s obligation to fund one-fifth of the put amount for each such trading day shall terminate and the put amount shall be adjusted accordingly. In the event that during a Valuation 
+ 
+
+ Period the Closing Price falls below the Floor Price for any two trading days, then the balance of each party s rights and obligations to purchase and sell the investment amount under such Put Notice shall terminate on such second trading day (the Termination Date ). The put amount shall be adjusted to include only one-fifth (1/5) of the initial put amount for each trading day during the Valuation Period prior to the Termination Date that the Closing Price equals or exceeds the Floor Price. As used herein, the Floor Price means the of the five most recent closing bid prices prior to the Put Date.
+ 
+ If, during any Valuation Period, we (i) subdivide or combine our common stock; (ii) pay a dividend in shares of common stock or makes any other distribution of shares of common stock; (iii) issue any options or other rights to subscribe for or purchase shares of common stock and the price per share is less than closing price in effect immediately prior to such issuance; (iv) issue any securities convertible into shares of common stock and the consideration per share for which shares of common stock may at any time thereafter be issuable pursuant to the terms of such convertible securities shall be less that the closing price in effect immediately prior to such issuance; (v) issue shares of common stock otherwise than as provided in the foregoing subsections (i) through (iv) at a price per share less than the closing price in effect immediately prior to such issuance, or without consideration; or (vi) make a distribution of its assets or evidences of its indebtedness to the holders of common stock as a dividend in liquidation or by way of return of capital or other than as a dividend payable out of earnings or surplus legally available for dividends under applicable law (collectively, a Valuation Event ), then a new Valuation Period shall begin on the trading day immediately after the occurrence of such Valuation Event and end on the fifth trading day thereafter.
+ 
+ We are relying on an exemption from the registration requirements of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder. The transaction does involve a private offering, Southridge is an accredited investor and/or qualified institutional buyer and Southridge has access to information about us and its investment.
+ 
+ Assuming the sale of the entire $20,000,000 in Put Shares being registered hereunder pursuant to the Equity Purchase Agreement, we will be able to receive $20,000,000 in gross proceeds. Neither the Equity Purchase Agreement nor any rights or obligations of the parties under the Equity Purchase Agreement may be assigned by either party to any other person.
+ 
+ There are substantial risks to investors as a result of the issuance of shares of our common stock under the Equity Purchase Agreement. These risks include dilution of stockholders, significant decline in our stock price and our inability to draw sufficient funds when needed.
+ 
+ Southridge will periodically purchase our common stock under the Equity Purchase Agreement and will, in turn, sell such shares to investors in the market at the market price. This may cause our stock price to decline, which will require us to issue increasing numbers of common shares to Southridge to raise the same amount of funds, as our stock price declines.
+ 
+ 6 
+ 
+
+ 
+ The Offering
+
+ Shares of common stock offered by Southridge:
+ 6,000,000 shares of common stock
+
+ 
+ 
+
+ Common stock to be outstanding after the offering:
+ Up to 400,245,972 shares of common stock.
+
+ 
+ 
+
+ Use of proceeds:
+ We will not receive any proceeds from the sale of the shares of common stock offered by Selling Security Holder. However, we will receive proceeds from sale of our common stock under the Purchase Agreement. See Use of Proceeds. 
+
+ Risk factors:
+ You should carefully read and consider the information set forth under the caption Risk Factors beginning on page 16 and all other information set forth in this prospectus before investing in our common stock.
+
+ 
+ 
+
+ OTC Bulletin Board Symbol:
+ GFOO
+
+ 
+
+ Past Transactions With Southridge Partners II, LP
+ We have not done any transactions with Southridge Partners II, LP or its affiliates.
+ 
+
+ Capital Requirements
+ Analysis of our business acquisition and operations cost indicate a reasonable requirement of US $20,000,000 or less. Based on market response to our products, services, and technologies, it is management s opinion that we will not require additional funding.
+
+ 7 
+ 
+
+ Risk Factors
+
+ An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment.
+ 
+RISKS RELATED TO OUR BUSINESS
+ 
+
+ WE ONLY HAVE LIMITED OPERATIONS AND WE HAVE NOT GENERATED SIGNIFICANT REVENUES OR PROFITS TO DATE. THERE IS NO ASSURANCE OUR FUTURE OPERATIONS WILL RESULT IN PROFITABLE REVENUES. IF WE CANNOT GENERATE SUFFICIENT REVENUES TO OPERATE PROFITABLY, WE MAY HAVE TO CEASE OPERATIONS 
+ 
+
+ We were incorporated on June 21, 2010. We have just started our proposed business operations and have only realized minimal revenues. We only have limited operations upon which an evaluation of our future success or failure can be made. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to earn profit by developing and marketing enzyme products. We cannot guarantee that we will be successful in generating significant revenues and profit in the future. Failure to generate significant revenues and profit will cause us to suspend or cease operations.
+ 
+
+ BECAUSE OUR AUDITORS HAVE ISSUED A GOING CONCERN OPINION, THERE IS SUBSTANTIAL UNCERTAINTY THAT WE WILL CONTINUE OPERATIONS IN WHICH CASE YOU COULD LOSE YOUR INVESTMENT.
+ 
+
+ Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such we may have to cease operations and you could lose your investment.
+ 
+
+ IF YI LUNG LIN, OUR SOLE DIRECTOR, SHOULD RESIGN OR DIE, WE WILL NOT HAVE A DIRECTOR. THIS COULD RESULT IN OUR OPERATIONS SUSPENDING, AND YOU COULD LOSE YOUR INVESTMENT.
+ 
+
+ We depend on the services of our sole director, Yi Lung Lin, for the future success of our business. The loss of the services of Mr. Lin could have an adverse effect on our business, financial condition and results of operations. If he should resign or die we will not have a director. If that should occur, until we find another person to act as our chief executive officer, our operations could be suspended. In that event it is possible you could lose your entire investment. We do not carry any key personnel life insurance policies on Mr. Lin and we do not have a contract for his services. 
+ 
+
+ WE MAY HAVE DIFFICULTY ATTRACTING AND RETAINING SKILLED PERSONNEL. OUR FAILURE TO DO SO COULD CAUSE US TO GO OUT OF BUSINESS.
+ 
+
+ Our future success will depend in large part on our ability to attract and retain highly skilled management, sales, marketing, and finance and product development personnel. Competition for such personnel is intense, and there can be no assurance that we will be successful in attracting or retaining such personnel. Failure to attract and retain such personnel could have a material adverse effect on our operations and financial condition or cause us to go out of business.
+ 
+ 8 
+ 
+
+ 
+WE WILL NEED SIGNIFICANT CAPITAL REQUIREMENTS TO CARRY OUT OUR BUSINESS PLAN, AND WE WILL NOT BE ABLE TO FURTHER IMPLEMENT OUR BUSINESS STRATEGY UNLESS SUFFICIENT FUNDS ARE RAISED, WHICH COULD CAUSE US TO DISCONTINUE OUR OPERATIONS.
+ 
+
+ We will require significant expenditures of capital in order to acquire and develop our planned operations. We plan to obtain the necessary funds through private equity offerings. We may not be able to raise sufficient amounts from our planned sources. In addition, if we drastically underestimate the total amount needed to fully implement our business plan, our ability to continue our business will be adversely affected.
+ 
+
+ Our ability to obtain additional financing is subject to a number of factors, including market conditions, investor acceptance of our business plan, and investor sentiment. These factors may make the timing, amount, terms and conditions of additional financing unattractive or unavailable to us. If we are unable to raise additional financing, we will have to significantly reduce our spending, delay or cancel planned activities or substantially change our current corporate structure. In such an event, we intend to implement expense reduction plans in a timely manner. However, these actions would have material adverse effects on our business, revenues, operating results and prospects, resulting in a possible failure of our business.
+ 
+
+ WE MAY BE SUSCEPTIBLE TO AN ADVERSE EFFECT ON OUR BUSINESS DUE TO THE CURRENT WORLDWIDE ECONOMIC CRISIS
+ 
+
+ Our market and sales results could be greatly impacted by the current worldwide economic crisis, making it difficult to reach sales goals and thus generate significant revenue.
+ 
+
+ WE HAVE NO EXPERIENCE AS A PUBLIC COMPANY. OUR INABILITY TO SUCCESSFULLY OPERATE AS A PUBLIC COMPANY COULD CAUSE YOU TO LOSE YOUR ENTIRE INVESTMENT.
+ 
+
+ We have never operated as a public company. We have no experience in complying with the various rules and regulations, which are required of a public company. As a result, we may not be able to operate successfully as a public company, even if our operations are successful. We plan to comply with all of the various rules and regulations, which are required of a public company. However, if we cannot operate successfully as a public company, your investment may be materially adversely affected. Our inability to operate as a public company could be the basis of your losing your entire investment.
+ 
+ U.S. INVESTORS MAY EXPERIENCE DIFFICULTIES IN ATTEMPTING TO EFFECT SERVICE OF PROCESS AND TO ENFORCE JUDGMENTS BASED UPON U.S. FEDERAL SECURITIES LAWS AGAINST THE COMPANY AND ITS SOLE NON-U.S. RESIDENT DIRECTOR AND TWO OFFICERS AND A U.S. OR FOREIGN PLAINTIFF MAY LACK STANDING OR OTHERWISE BE UNABLE TO BRING A LAWSUIT IN A TAIWANESE OR CHINESE COURT, INCLUDING A CASE WHICH IS PREDICATED UPON U.S. SECURITIES LAWS.
+ 
+
+ Our sole director and our two officers are not residents of the United States. Consequently, it may be difficult for investors to effect service of process on Mr. Lin and our other directors in the United States and to enforce judgments obtained in United States courts against Mr. Lin based on the civil liability provisions of the United States securities laws. Since all our assets are located in Taiwan and Singapore it may be difficult or impossible for U.S. investors to collect a judgment against us. As well, any judgment obtained in the United States against us may not be enforceable in the United States. 
+ 
+
+ In addition, a U.S. or foreign plaintiff may lack standing or otherwise be unable to bring a lawsuit in a Taiwanese or Singaporean court, including a case which is predicated upon U.S. securities laws.
+ 
+
+ THE SAFETY AND EFFECTIVENESS OF OUR PRODUCTS IS NOT SUBJECT TO CLINICAL TESTING AND THE VARIOUS GOVERNMENTAL REGULATORY BODIES OVERSEEING THE PROMOTION AND SALE OF OUR PRODUCTS IN OUR TARGET MARKETS HAVE NOT VERIFIED ANY OF THE POSITIVE HEALTH BENEFITS THAT WE ATTRIBUTE TO OUR PRODUCTS, AND THAT ANY CLAIM OF HEALTH BENEFITS THAT WE MAKE WITH RESPECT TO OUR PRODUCTS HAS NOT BEEN INDEPENDENTLY SUBSTANTIATED AND THEREFORE OUR PRODUCTS MAY NOT PRODUCE THE POSITIVE HEALTH BENEFITS THAT WE ASCRIBE TO THEM.
+ 
+
+ The safety and effectiveness of our products is not subject to clinical testing and the various governmental regulatory bodies overseeing the promotion and sale of our products in our target markets have not verified any of the positive health benefits that we attribute to our products, and that any claim of health benefits that we make with respect to our products has not been independently substantiated and therefore our products may not produce the positive health benefits that we ascribe to them. If our products are deemed not be safe or effective or if our products our clinically tested and found not to provide the health benefits that we ascribe to them, this could have material adverse effects on our business, revenues, operating results and prospects, resulting in a possible failure of our business and the loss of your investment.
+ 
+WE ONLY HAVE TWO OFFICERS AND ONE DIRECTOR WHICH MAY LEAD TO FAULTY CORPORATE GOVERNANCE.
+ 
+We have two officers and one director who makes all of the decisions regarding corporate governance. This includes his (executive) compensation, accounting overview, related party transactions and so on. He will also have full control over matters that require Board of Directors approval. This may introduce conflicts of interest and prevent the segregation of executive duties from those that require Board of Directors approval. This may lead to ineffective disclosure and accounting controls. None compliance with laws and regulations may result in fines and penalties. Mr. Lin would have the ability to take any action as he himself would review them and approve them. He would exercise control over all matters requiring shareholder approval including significant corporate transactions. We have not implemented various corporate governance measures nor have we adopted any independent committees as we presently do not have any independent directors. 
+ 
+ 9 
+ 
+
+ 
+OUR TWO OFFICERS AND SOLE DIRECTOR HAS NO FORMAL TRAINING IN FINANCIAL ACCOUNTING AND HE IS NOT CAPABLE OF PREPARING U.S. GAAP FINANCIAL STATEMENTS AND THEREFORE IS REQUIRED TO HIRE ADDITIONAL EXPERIENCED PERSONNEL TO ASSIST US WITH THE PREPARATION THEREOF.
+ Because our two officers and sole director has no formal training in financial accounting or preparing U.S. GAAP Financial Statements, the y will be required to hire additional experienced personnel to assist us with the preparation thereof. In the event that we are unable to engage experienced personnel to prepare the financial statements according to U.S. GAAP, we may not be able to provide effective disclosure and accounting controls to comply with applicable laws and regulations which could result in fines, penalties or assessments against us.
+ 
+RISKS RELATED TO OUR INDUSTRY
+ 
+
+ CURRENCY EXCHANGE RATE FLUCTUATIONS MAY INCREASE OUR COSTS. 
+ 
+
+ The exchange rates between the U.S. dollar and non-U.S. currencies in which we conduct our business have and will likely fluctuate in the future. Any appreciation in the value of these non-U.S. currencies would result in higher expenses for our company. We do not have any hedging arrangements to protect against such exchange rate exposures. 
+ 
+
+ IMPORT/EXPORT REGULATIONS AND TARIFFS MAY CHANGE AND INCREASE OUR COSTS. 
+ 
+
+ We are subject to risks associated with the regulations relating to the export of products. We cannot predict whether the export of our products will be adversely affected by changes in, or enactment of new quotas, duties, taxes or other charges or restrictions imposed by the Asian countries in the future. Any of these factors could have a material adverse effect on our operating costs. 
+ 
+
+ RISKS RELATED TO OUR OFFERING
+ 
+
+ OUR SHARES OF COMMON STOCK ARE SUBJECT TO THE PENNY STOCK RULES OF THE SECURITIES AND EXCHANGE COMMISSION AND THE TRADING MARKET IN OUR SECURITIES WILL BE LIMITED, WHICH WILL MAKE TRANSACTIONS IN OUR STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.
+ 
+
+ The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer, and sales person in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for stock that becomes subject to those penny stock rules. If a trading market for our common stock develops, our common stock will probably become subject to the penny stock rules, and shareholders may have difficulty in selling their shares.
+ 
+
+ THERE IS NO CURRENT TRADING MARKET FOR OUR SECURITIES AND IF A TRADING MARKET DOES NOT DEVELOP, PURCHASERS OF OUR SECURITIES MAY HAVE DIFFICULTY SELLING THEIR SHARES.
+ 
+
+ There is currently no established public trading market for our securities and an active trading market in our securities may not develop or, if developed, may not be sustained. We intend to have a market maker apply for admission to quotation of our securities on the Over-the-Counter Bulletin Board after the Registration Statement relating to this prospectus is declared effective by the SEC. We do not yet have a market maker who has agreed to file such application. If for any reason our common stock is not quoted on the Over-the-Counter Bulletin Board or a public trading market does not otherwise develop, purchasers of the share may have difficulty selling their common stock should they desire to do so. No market makers have committed to becoming market makers for our common stock and none may do so.
+ 
+
+ ANY ADDITIONAL FUNDING WE ARRANGE THROUGH THE SALE OF OUR COMMON STOCK WILL RESULT IN DILUTION TO EXISTING SHAREHOLDERS.
+ 
+
+ We must raise additional capital in order for our business plan to succeed. Our most likely source of additional capital will be through the sale of additional shares of common stock. Such stock issuances will cause stockholders' interests in our company to be diluted. Such dilution will negatively affect the value of investors shares.
+ 
+
+ YOUR PERCENTAGE OWNERSHIP IN US MAY BE DILUTED BY FUTURE ISSUANCES OF CAPITAL STOCK, WHICH COULD REDUCE YOUR INFLUENCE OVER MATTERS ON WHICH STOCKHOLDERS VOTE.
+ 
+
+ Our Board of Directors has the authority, without action or vote of our stockholders, to issue all or any part of our authorized but unissued shares of common stock, including shares issuable upon the exercise of options or shares that may be issued to satisfy our payment obligations. Issuances of additional common stock would reduce your influence over matters on which our stockholders vote. 
+ 
+
+ WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE WHICH MAY MAKE IT MORE DIFFICULT FOR YOU TO EARN A RETURN ON YOUR INVESTMENT WITH US. 
+ 
+
+ We have never paid any dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our board of directors will consider. Since we do not anticipate paying cash dividends on our common stock, return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock. Therefore, you may have difficulty earning a return on your investment with us.
+
+ SOUTHRIDGE WILL PAY LESS THAN THE THEN-PREVAILING MARKET PRICE FOR OUR COMMON STOCK.
+ 
+
+ The common stock to be issued to Southridge pursuant to the Equity Purchase Agreement will be purchased at a 92% discount to the lowest closing best bid price (the closing bid price as reported by Bloomberg LP) of the common stock for any single trading day during the five consecutive trading days immediately following the date of our notice to Southridge of our election to put shares pursuant to the Equity Purchase Agreement. Southridge has a financial incentive to sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price. If Southridge sells the shares, the price of our common stock could decrease. If our stock price decreases, Southridge may have a further incentive to sell the shares of our common stock that it holds. These sales may have a further impact on our stock price.
+ 
+ 10 
+ 
+
+ 
+ 
+ 
+
+ Forward-Looking Statements
+ 
+
+ Statements in this prospectus may be forward-looking statements. Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those described above and those risks discussed from time to time in this prospectus, including the risks described under Risk Factors, and Management s Discussion and Analysis of Financial Condition and Results of Operations in this prospectus and in other documents which we file with the Securities and Exchange Commission. In addition, such statements could be affected by risks and uncertainties related to our ability to raise any financing which we may require for our operations, competition, government regulations and requirements, pricing and development difficulties, our ability to make acquisitions and successfully integrate those acquisitions with our business, as well as general industry and market conditions and growth rates, and general economic conditions. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this prospectus.
+ 
+
+ 
+
+ Use of Proceeds 
+ 
+
+ We will not receive any proceeds from the sale of common stock offered by Southridge. However, we will receive proceeds from the sale of our common stock to Southridge pursuant to the Equity Purchase Agreement. The proceeds from our exercise of the Put Right pursuant to the Equity Purchase Agreement will be used for working capital.
+ 
+ 
+ SELLING SECURITY HOLDER
+ 
+
+ The following table details the name of each selling stockholder, the number of shares owned by Southridge Partners II, LP ( Southridge ) the sole selling stockholder, and the number of shares that may be offered by Southridge Partners II, LP is not a broker-dealer. Southridge is deemed an underwriter and therefore this offering is also considered an indirect primary offering. Southridge may sell up to 6,000,000 shares, which are issuable upon the exercise of our put right with Southridge. Southridge will not assign its obligations under the equity line of credit.
+ 
+
+ Name
+ Total number of
+ shares owned
+ prior to offering
+ Percentage of
+ shares owned
+ prior to offering
+ Number of
+ shares being
+ offered
+ Percentage of shares
+ owned after the
+ offering assuming all
+ of the shares are sold
+ in the offering(1)
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Southridge Partners II, LP (2)
+ 0
+ 0
+ 6,000,000
+ 0%
+
+ 
+
+ (1)
+ The number assumes the Selling Security Holder sells all of its shares being offering pursuant to this prospectus.
+ 
+
+ (2)
+ Stephen Hicks possesses voting power and investment power over shares which may be held by Southridge.
+ 
+
+ Plan of Distribution 
+ 
+
+ This prospectus relates to the resale of 6,000,000 Shares of our common stock, par value $0.001 per share, by the Selling Security Holder consisting of Put Shares that we will put to Southridge pursuant to the Purchase Agreement.
+ 
+
+ The Selling Security Holder may, from time to time, sell any or all of its shares of our common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. The Selling Security Holders may use any one or more of the following methods when selling shares:
+ 
+
+ 
+ ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
+ 
+
+ 
+ block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;
+ 
+
+ 
+ purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
+ 
+
+ 
+ an exchange distribution in accordance with the rules of the applicable exchange;
+ 
+
+ 
+ privately negotiated transactions;
+ 
+
+ 
+ broker-dealers may agree with the Selling Security Holders to sell a specified number of such shares at a stipulated price per share;
+ 
+
+ 
+ through the writing of options on the shares;
+ 
+
+ a combination of any such methods of sale; and
+ 
+
+ 
+ any other method permitted pursuant to applicable law.
+ 
+ According to the terms of the Purchase Agreement, neither Southridge nor any affiliate of Southridge acting on its behalf or pursuant to any understanding with it will execute any short sales during the term of this offering.
+ 
+
+ 11 
+ 
+
+The Selling Security Holder may also sell the shares directly to market makers acting as principals and/or broker-dealers acting as agents for themselves or their customers. Such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the Selling Security Holder and/or the purchasers of shares for whom such broker-dealers may act as agents or to whom they sell as principal or both, which compensation as to a particular broker-dealer might be in excess of customary commissions. Market makers and block purchasers purchasing the shares will do so for their own account and at their own risk. It is possible that a Selling Security Holder will attempt to sell shares of Common Stock in block transactions to market makers or other purchasers at a price per share which may be below the then market price. The Selling Security Holder cannot assure that all or any of the shares offered in this prospectus will be issued to, or sold by, the Selling Security Holders. In addition, the Selling Security Holders and any brokers, dealers or agents, upon effecting the sale of any of the shares offered in this prospectus are underwriters as that term is defined under the Securities Act or the Exchange Act, or the rules and regulations under such acts. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
+ 
+ Discounts, concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by a Selling Security Holder. The Selling Security Holder may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares if liabilities are imposed on that person under the Securities Act.
+ 
+ We are required to pay all fees and expenses incident to the registration of the shares of common stock. Otherwise, all discounts, commissions or fees incurred in connection with the sale of our common stock offered hereby will be paid by the Selling Security Holder.
+ 
+ The Selling Security Holder acquired the securities offered hereby in the ordinary course of business and has advised us that it has not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their shares of common stock, nor is there an underwriter or coordinating broker acting in connection with a proposed sale of shares of common stock by the Selling Security Holder. We will file a supplement to this prospectus if the Selling Security Holder enters into a material arrangement with a broker-dealer for sale of common stock being registered. If the Selling Security Holder uses this prospectus for any sale of the shares of common stock, it will be subject to the prospectus delivery requirements of the Securities Act.
+ 
+
+ The anti-manipulation rules of Regulation M under the Exchange Act, may apply to sales of our common stock and activities of the Selling Security Holder. The Selling Security Holder will act independently of us in making decisions with respect to the timing, manner and size of each sale.
+ 
+ Southridge is an underwriter within the meaning of the Securities Act in connection with the sale of our common stock under the Equity Purchase Agreement. For each share of common stock purchased under the Purchase Agreement, Southridge will pay 92% of the lowest Bid Prices during the Valuation Period.
+ 
+ We will pay all expenses incident to the registration, offering and sale of the shares of our common stock to the public hereunder other than commissions, fees and discounts of underwriters, brokers, dealers and agents. If any of these other expenses exists, we expect Southridge to pay these expenses. We have agreed to indemnify Southridge and its controlling persons against certain liabilities, including liabilities under the Securities Act. We estimate that the expenses of the offering to be borne by us will be approximately $902,000.00. We will not receive any proceeds from the resale of any of the shares of our common stock by Southridge. We may, however, receive proceeds from the sale of our common stock under the Purchase Agreement.
+ 
+
+ 12 
+ 
+
+ MARKET FOR OUR COMMON STOCK
+
+ Our shares are traded on the Bulletin Board operated by the Financial Industry Regulatory Authority under the symbol GFOO . There is a limited public market for our common shares. 
+ Our common stock became eligible for quotation on the OTC Bulletin Board on June 5, 2012. As of October 31, 2013, only a minimal amount of shares have traded on the OTCBB and the market price for our common shares is $0.05 per share.
+ 
+
+ Dividend Policy
+ 
+We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future. 
+ 
+Share Purchase Warrants 
+ 
+We have not issued and do not have outstanding any warrants to purchase shares of our common stock. 
+ 
+Options 
+ 
+We have not issued and do not have outstanding any options to purchase shares of our common stock. 
+ 
+Convertible Securities
+ 
+We do not have outstanding any securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock. 
+
+ Interests of Named Experts and Counsel 
+
+ No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, an interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee. 
+ 
+Dean Law Corp. has provided an opinion on the validity of our common stock.
+
+ The financial statements included in this prospectus have been audited by M&K CPAS, PLLC to the extent and for the periods set forth in their report appearing elsewhere in this document and in the registration statement filed with the SEC, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting. 
+ 
+ 13 
+ 
+
+ Description of Business
+ 
+
+ General
+ 
+
+ We were incorporated in the State of Nevada on June 21, 2010.
+ 
+
+ We are a start-up company and our main focus is to promote, market, distribute and export enzyme products to the Asian market such as Singapore, Malaysia, Thailand, Taiwan, Hong Kong, Macau, China and Sri Lanka. These enzyme products are specifically formulated for our marketing and distribution under contract manufacturing arrangements with our contracted OEM manufacturer in the United States, Specialty Enzymes and Biochemicals Co. (Advance Supplemental Therapies or AST Enzymes). They are located in Chino, California, USA.
+ 
+
+ In addition, the material terms of our agreement with them are as follows:
+ 
+
+ * Products ordered by us are specially formulated for our distribution;
+ * Products will be marketed under our private label;
+ * We will have access to laboratory testing facilities; and
+ * They will supply us with technical product information support.
+ 
+
+ Enzymes are not living things, they are like minerals. But unlike minerals, they are made by living cells. Thus, enzyme is a catalyst responsible for biochemical reactions in living things (including animals, plants, microorganisms), synthesis, decomposition, oxidation, transfer and isomerisation; is the process by which one molecule is transferred into another molecule which has exactly the same atoms, but the atoms are rearranged.
+ 
+ Without enzymes, the lack of it or with its destruction, biotic phenomena would stop, DNA would undergo a drastic change, unusual illnesses would occur and metabolism would become abnormal, among others. Hence, we can conclude that Biotic phenomena are testimonies of enzyme s activities .
+ 
+ Enzyme is actually a complex globule protein. It re-acts optimum under body temperature. Reaction takes many times faster with added enzymes. Therefore, regular consumption of enzyme is good to our well-being. In fact it has been categorized under GRAS (Generally Regarded As Safe) by the Food and Drug Administration. Our body loses enzymes as we grow old. It has been proven that many chronic, hereditary diseases and functional imbalance are caused by the deficiency of certain enzymes, for example, lipase (fat enzyme) deficiency causes hepatic diseases, diabetes and Vitamin A deficiency. Amylase (carbohydrate enzyme) deficiency results in liver diseases and gastro enteric diseases. An enzyme is neither a drug, medicine nor a herb. It is the Cell Activator. It is extracted from fruits and vegetables. It can be a natural complex enzyme, plant-based complex enzyme or microbial enzyme. It is for the body cell. It is the Cell activator; refers to the enzymes catalyse and regulate every biochemical reaction that occurs within the human body, making them essential to cellular function and health. Human beings and animals will die without enzyme. Therefore, there are four types of enzyme products, Enzyme for Human Consumption (Adult), Enzyme for Human Consumption (Children), Enzyme for Animal Consumption and Enzyme for Industrial Consumption. We intend to focus primarily the Enzyme for Human Consumption (Adult) and Enzyme for Animal Consumption and when we achieve our marketing objective, we will implement the secondary product line of Enzyme for Human Consumption (Children) and Enzyme for Industrial Consumption. All of these enzymes products will be promoted, marketed, distributed and exported to the Asian market.
+ 
+
+ 
+ 14 
+ 
+
+ 
+ProCellax Range of Enzyme Products for Human Body Cells Chart
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ We were appointed by Origo Biochemical Technologies Inc, located in Taiwan as their Sole Export Marketing Agent to market their enzyme products for human consumption to Thailand and business has started since July 1, 2010. On February 16, 2011 we provided Origo with a notice of termination for our agreement due to breach of contract, and as such have terminated our relationship with them.
+ 
+
+ The termination of the agreement with Origo has had a minimal impact on our business. In fact, we were able to replace them as our enzyme supplier and have been able to introduce our range of enzyme products under our private label, namely, ProCellax DG1, ProCellax DG2, ProCellax DG1 Sachet, ProCellax FG1, ProCellax VDIHF, ProCellax SNU, ProCellax E, ProCellax E2AF, and ProCellax SP. These new products were manufactured and supplied by Specialty and Biochemicals Co. (Advance Supplemental Therapies) in Chino, California, USA. They are our present OEM Manufacturer. Since Specialty and Biochemcials Co. is based in the United States, it will allow us to change and focus promoting US-made enzyme products.
+ 
+
+ To-date, we have also available for distribution the range of enzyme products for Animal Consumption under our private label, namely, ProAnilaz SW1013, ProAnilax SEB, ProAnilax EPET, ProAnilax SP3 and ProAnilax AFL2500 all of which were manufactured and supplied by Specialty and Biochemicals Co. 
+ 
+
+ We intend to promote, market, distribute and export our range of enzyme products, ProCellax and ProAnilax to the Asian market on a Business Model established to achieve our ultimate business objective. We own the following trademarks: GEEC, ProCellax, ProAnilax and ProBrew.
+ 
+
+ 15 
+ 
+This Is How We Grow
+ 
+
+ The Emerging Growth Tree Chart
+ 
+
+ 
+ 
+ 
+ 
+
+ 
+ 16 
+ 
+
+ Our Business Model
+ 
+
+ Our business model is based on a strategic marketing approach to establish branding on a stage by stage basis educating the general public in the target market about our enzyme products and for distribution through the appointment of Sole Country Distributorship and through our wholly subsidiary companies as shown in the chart below:
+ 
+
+ Distribution Network Chart
+ 
+
+ 
+ 
+
+ 
+ The business model we have is based on a disciplined approach on a distribution channel mix that will enable us to focus on the selected target markets with our consolidated limited cash resources on hand thus improving maximum distribution and enjoying over time possibility of sound profits at minimal operating costs.
+ 
+
+ 17 
+ 
+Our Markets and Growth Opportunities
+ 
+
+ On September 21, 2010, the Company entered into a Sole Marketing Agent Agreement with Access Management Consulting and Marketing Pte Ltd ( Access Management Consulting ) for the marketing of the Company s range of enzyme products and to source, select and interview country sole distributors for the distribution of our range of enzyme products to the world at large. The Company s President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and director, Mr. Yi Lung Lin, is also the director and managing director of Access Management Consulting.
+ 
+
+ Taiwan Market
+ 
+
+ On October 11, 2010, the Company entered into a Sole Distributorship Agreement (General Outlet Human Consumption) with Taiwan Cell Energy Enzymes Corporation ( TCEEC ) for marketing and distribution of the Company s ProCellax range of enzyme products in the Territory of the Republic of China (Taiwan) for a period of five years, expiring on October 11, 2015. Chen Wen Hsu, a director of the Company at that time had controlling interest and voting rights over TCEEC. On February 5, 2013, he was removed as a director of the Company. On July 8, 2013, we terminated the Sole Distributorship Agreement on the ground that we had on March 14, 2013 filed a civil claim against TCEEC for breach of contract under clause 13.3.4.2 of that Sole Distributorship Agreement. Case 2:13-cv-00435-RCJ-CWH in the District of Nevada. On April 30, 2013, the District Court in the District of Nevada entered a default against TCEEC and on May 17, 2013, a Motion for Default Judgment against TCEEC was filed. We had also on June 21, 2013 filed a criminal complaint with the Taiwan Public Prosecutors Office against Chen Wen Hsu and Pi Lien Peng. On July 8, 2013, we served notice of termination pursuant to clause 15.2.5 on TCEEC. The termination has insignificant impact on the distribution of ProCellax range of enzyme product in Taiwan. The Taiwan Health Authority had since June 7, 2012 approved ProCellax SP and on January 7, 2013 approved ProCellax FG1 for importation and distribution. ProCellax DG2 and ProCellax SNU are waiting for approval. We intend to appoint another suitable party to be the Sole Country Distributor for Human Consumption (Adult) for Taiwan to replace TCEEC. We believe export to Taiwan would resume sometime early 2014.
+ 
+
+ Sri Lanka Market
+ 
+
+ We have applied to the Sri Lanka Authority to change our subsidiary company s name to Genufood Enzymes Lanka (Pvt) Ltd with the view to import and distribute the entire ProCellax and ProAnilax range of enzyme products when the product registration with the relevant Sri Lanka authorities have been completed.
+ 
+ On July 6, 2012, we had been informed by the Sri Lanka Ministry of Health that ProCellax E, ProCellax SP, ProCellax E2AF, ProCellax DG1 and ProCellax SNU could be categorized as supplementary drugs according to their pharmaceutical references. On July 8, 2013, we have notified A Baurs & Co (Pvt) Ltd that we would be importing and distributing the ProCellax range of enzyme products in Sri Lanka by ourselves. We expect that the export will commence once approval sought, which would take approximately 6 months or so.
+ 
+
+ Malaysia, Thailand, China, Macau and Hong Kong Markets
+ 
+
+ We intend to appoint a Sole Country Distributor in each of these countries and to export once the production registration is completed. We expect export to these markets will commence sometime in 2014.
+ 
+
+ Singapore Market
+ 
+
+ Singapore is the key cosmopolitan country in the South East Asia, multi-racial with a population of 5,312,400 inhabitants. 
+ 
+
+ Singapore Population Chart
+ 
+
+ 
+ 
+ 
+
+ According to the World Wealth Report 2012, Singapore had the highest income per capita of $56,532 for 2010 and will continue to maintain that status to achieve $137,710 by the year 2050.
+ 
+ 18 
+ 
+
+ According to The World Wealth Report 2012 
+ by Knight Frank and Citi Private Bank
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ According to Singapore Ministry of Health, Singaporean life expectancy is about 79.3 to 81.8 years, but Singaporeans suffered from major health diseases contributing toward death such as cerebrovascular disease, pneumonia, ischaemic heart disease and cancer as shown in the chart below:
+ 
+
+ Singapore Principal Causes of Death Chart
+ 
+
+ 
+ 
+
+ Source: Ministry of Health Singapore 
+ 
+
+ According to a survey carried out by Euomonitor, Singaporeans are health conscious and about 48% of the population consume vitamins or dietary supplements. This implies that one out of every two residents of Singapore took health supplements.
+ 
+ 19 
+ 
+
+ Consumption Rate Chart
+ 
+
+ 
+ 
+
+ 
+
+ 
+ 
+ 
+ Euromonitor Singapore reported that Singapore Supplements Market has a market size over $260 million and the decision makers are females from the age of 30 to 54 years old. This group makes up of 20.7% of the Singapore total population whom are the decision makers.
+ 
+
+ Singapore Market Size Chart
+ 
+
+ Market Size
+ * Over US$ 260 million in year 2010
+ 
+
+ Target Audience
+ * Females 30-54 years old 
+ * They make up 20.7% of the Singapore total population 
+ * They are decision makers
+ 
+
+ Source: Euromonitor Singapore 2012
+ 
+ We intend to focus on the Singapore market. Our wholly owned subsidiary company in Singapore, Genufood Enzymes (S) Pte Ltd ( GESPL ) was incorporated on February 13, 2012 and became the Sole Country Distributor for the Territory of the Republic of Singapore including the provision of internet sales activities.
+ 
+
+ 20 
+ 
+
+Internet Sales
+ 
+
+ Sometime late October, 2012, GESPL launched its internet sales activities through their website:
+ www.genufoodenzymes.com.sg Internet Sales, through a twelve month period ended September 30, 2013 came to $15,869 accredited with 185 consumers being our GEEC Enzyme Club Members. 
+ 
+
+ Internet Sales Chart
+ 
+
+ 
+
+ 
+ 
+
+ GEEC Enzyme Club Membership Growth Chart
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ We intend to focus on internet sales as part of our revenue through the enlargement of GEEC Enzyme Club Membership data base. We also intend to launch a membership drive program. We may not succeed if we do not have the financial means.
+ 
+
+ 21 
+ 
+
+Retailers Medical Clinics
+ 
+
+ With the launch of the Internet Sales, medical clinics were attracted to be our retailers, selling ProCellax range of enzyme products to their patients. For a nine month period ended September 30, 2013, sales of
+ $6,335 with two medical clinics were recorded. 
+ 
+
+ 
+ Sales to Retailers Medical Clinics Chart
+ 
+
+ 
+ 
+
+ 
+
+ We would also focus on medical clinics to expand our revenue through implementation of attractive sales promotion plans that will expand their trading profit margins. We will recruit and employ suitable experienced and qualified sales personnel to execute our sales plan and to provide after sales service. We may not succeed if we cannot offer better or higher discount rates to the medical clinics or provide them with credit terms.
+ 
+
+ Between October and November, 2012, we started to create market awareness by participation at the Beauty Fair Exhibition and Halal International Fair in Singapore. The launch product selected was ProCellax DG1, a digestive enzyme.
+ 
+ 22 
+ 
+
+ GEEC at Beauty Fair
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ GEEC at Halal International Fair
+ 
+
+ 
+ 
+
+ We also participated in the Cozycot Workshop. CozyCot has about 20,000 members and nutritionist, Jensine Yang from our OEM Manufacturer, Specialty and Biochemicals & Co flew in to deliver enzyme education and about GEEC enzymes to members of CozyCot.
+ 
+ 23 
+ 
+
+ 
+
+ GEEC at CozyCot Workshop Avalon
+ 
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ As from December, 2012 to September, 2013 we carried out test marketing by ways of free sampling execution of guerilla activation at popular places of interests in Singapore such as Orchard Road and Clarke Quay. We distributed 36,913 ProCellax range of enzyme products in the form of sachets and bottles to the general public. In return, we sold 787 bottles.
+ 
+ 
+ 24 
+ 
+
+ 
+
+ ProCellax Free Sampling Chart
+ 
+
+ 
+ 
+
+ 
+
+ Sales Quantity for ProCellax Chart
+ 
+
+ 
+ 
+
+ 
+ To-date, with the GEEC Retail Chain Store at Suntec City Mall, Singapore, we have recorded sales revenue of $39,891 as shown in the charts below:
+ 
+ 
+ 25 
+ 
+
+ 
+
+ Retail Chain Store Sales Revenue Chart
+ 
+
+ 
+
+ 
+ 
+
+ 
+ 
+ Sales Revenue Chart
+ 
+
+ 
+ 
+ 
+
+ 
+
+ 
+
+ 26 
+ 
+
+ 
+SALES PERFORMANCE CHART UP TO SEPTEMBER 30, 2013 - OVERVIEW
+ 
+
+ 
+ 
+ 
+
+ 
+ GEEC Retail Chain Stores
+ 
+
+ We plan to establish a sound distributing base in Singapore with the view to service our GEEC Enzyme Club Members and the general public better by the establishment of GEEC Retail Chain Stores. We plan to have ten retail stores. On May 2, 2013, GESPL entered into a three year lease agreement with Harmony Convention Holding Pte Ltd to establish the first GEEC Retail Store at 3 Temasek Boulevard #02-333, Suntec City Mall, Singapore 038983. The main provisions of the tenancy agreement are:
+ 
+
+ 
+ Paragraph 2 of the fourth Schedule permits us to operate at the shopping mall from 10.00 am to 10.00 pm on Mondays to Sundays (including public holidays) except for the two days of the Chinese New Year;
+ 
+
+ 
+ Section 4 of the Sixth Schedule requires us to pay rent per month of about $9,444 (SGD12,067.46) or fifteen percent (15%) of the gross sales, whichever is the higher;
+ 
+
+ 
+ Section 7 of the Sixth Schedule requires us to contribute about $144 (SGD184.24) per month towards the promotion fund;
+ 
+
+ 
+ Section 11 of the Sixth Schedule requires us to have all risks insurance coverage of not less than $782,620 or SGD1,000,000;
+ 
+
+ 
+ Landlord s rights are stipulated under clause 24; and
+ 
+
+ 
+ Default and termination provisions are stated under clause 28.
+ 
+ On July 14, 2013, the GEEC Retail Chain Store at Suntec City Mall commences official business and total sales revenue of $18,110 has been recorded to-date as shown in the chart below:
+ 
+
+ 27 
+ 
+
+ 
+
+ GEEC Chain Store at Suntec City Mall Sales Revenue Chart
+ 
+
+ 
+ 
+ 
+ GEEC Retail Chain Store at Suntec City Mall, Singapore
+ 
+
+ 
+ 
+
+ 28 
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+ 
+
+ 
+ 
+
+ 
+ The above pictures show site of the GEEC Retail Chain Store at Suntec City Mall, Singapore. It has an area of 600 square feet. On July 14, 2013, the Store commenced official business operations.
+ 
+
+ We plan to have nine other retail stores at strategic locations around the heart of the city of Singapore. The location of the planned GEEC Retail Chain Stores is as follows:
+ 
+
+ 29 
+ 
+
+ 
+
+ Proposed GEEC Retail Chain Stores List
+ 
+
+ No. 
+ Location Name 
+ Area
+
+ 1
+ Suntec City Mall
+ 600 square feet
+
+ 2
+ Plaza Singapura (Central) 
+ 600 square feet
+
+ 3
+ AMK Hub (North) 
+ 600 square feet
+
+ 4
+ Vivo City Mall (South) 
+ 600 square feet
+
+ 5
+ JEM (West) 
+ 500 square feet
+
+ 6
+ Tampines Mall (East) 
+ 500 square feet
+
+ 7
+ Toing Bahru Plaza (Central) 
+ 600 square feet
+
+ 8
+ Waterway Point (North-East)
+ 500 square feet
+
+ 9
+ The Centre Point (Town) 
+ 659 square feet
+
+ 10
+ Star Vista (West) 
+ 500 square feet
+
+ 
+ 
+ 
+ We also plan to have retail stores inside the Singapore Changi International Airport but there is no assurance that we would be the successful bidder for the tender of if we do not have the financial means to go for the tender.
+ 
+ 30 
+ 
+
+ 
+
+ Proposed GEEC Retail Chain Stores
+ Location Map of Singapore
+ 
+
+ .
+ 
+ 
+
+ We may not succeed to have the GEEC Retail Chain Stores accomplished if we do not have the financial means. We would then not be in a position to compete with other leading health supplement retailers such as Guardian Health & Beauty, Watson Personal Care Store, Holland & Barrett, Unity Health Care, GNC, Nature s Farm and Sunrider. 
+ 
+
+ As part of our expansion plans, we have begun to target and hope to make contact formal commitments with other marketing and distribution companies for marketing and distribution of our ProCellax range of enzyme products for human consumption (Adult) and ProAnilax range of enzyme product for animal consumption in the targeted countries. Our duly appointed Sole Marketing Agent, Access Management Consulting will be working towards this objective.
+ 
+
+ We now have an office in the United States. It is situated at Two Allen Center, 1200 Smith Street, Suite 1600, Houston, Texas 77002. Our telephone number is 713 353 8834. We pay rent for this office. We had on March 22, 2013 entered into a Virtual Office Service Agreement with Servcorp Los Angeles for an office at 601 South Figueroa Street, Suite 4050, Los Angeles, California 90017 to enable us to accommodate sales and marketing personnel and internal audit personnel. Our ability to do all of these will depend on our financial condition and our ability to secure additional financing, whether it is through public or private equity or debt financing, arrangements with security holders or other sources to fund the operations. However, these sources of additional funding may not be available, or if available, may be on terms unacceptable to us.
+ 
+ 
+ 31 
+ 
+ 
+
+ Strategy and Strengths
+ 
+
+ We aim to strengthen and expand our leading market positions, continuously improve the quality of our range of enzyme products, diversify our distribution channels and to deliver long-term value for our shareholders via the following strategies:
+ 
+
+ 
+ Grow and strengthen our presence in the Republic of Singapore;
+ 
+
+ 
+ Further expand into other neighboring country in the target markets;
+ 
+
+ 
+ Continue to focus and capture growth in the enzyme industry;
+ 
+
+ 
+ Leverage our scale, market positions and business integration to enhance profitability; and
+ 
+
+ 
+ Continue to attract, retain and develop quality personnel.
+ 
+
+ We will be the largest and leading enzyme distributor and leading enzyme therapy provider in the target markets upon funding being raised. Our range of enzyme products are specially formulated for our distribution supported by our OEM Manufacturer: Specialty and Biochemicals & Co which are enzyme experts with more than 50 years of experience: One that formulates and creates enzyme supplements, not simply encapsulates and bottles them. We offer consumers a natural, safe and highly effective therapeutic alternative for preventative care and health. Our range of enzyme products are Halal Certified; Non-GMO, all-natural ingredients; Improved enzyme absorption, stability and bioavailability through Bioactive Protein Peptide System proprietary blend; ISO 9001:2000 and GMP Certified; and suitable for vegans/vegetarians. 
+ 
+
+ 32 
+ 
+
+ 
+Enzyme for Human Consumption (Adult)
+ 
+
+ GEEC DIGESTIVE ENZYME PRODUCTS
+ 
+
+ ProCellax DG1
+ 
+
+ 
+ Breaks down proteins, fats, carbohydrates, and dairy products
+ 
+ Relieves indigestion, gas, bloating
+ 
+ Enhances nutrient absorption
+ 
+ Improves overall digestive function
+ 
+
+ Ingredients
+ v
+ Protease breaks down proteins 
+ v
+ Amylase breaks down starch
+ v
+ Lactase breaks down lactose 
+ v
+ Invertase breaks down sucrose
+ v
+ Cellulase breaks down cellulose
+ v
+ Lipase breaks down fats
+ 
+
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+ We do not manufacture the enzyme product above. It is specifically formulated for our distribution. It is packed under our private label pursuant to the contract manufacturing arrangements. The brand name ProCellax DG1 belongs to us, and trademark applications have been filed in the target markets.
+ 
+
+ It is a microbial enzyme, plant enzyme, with herbs and vitamins. ProCellax DG1 is a broad-spectrum digestive enzyme blend formulated to enhance nutrient absorption and bioavailability. It supports proper digestion of dairy, legumes, cruciferous vegetables, cereal grains, proteins and other foods. It is a dietary supplement. It comes in capsule form with each capsule at 500 mg. There are 90 capsules per bottle.
+ 
+
+ 33 
+ 
+
+ 
+ProCellax DG2
+ 
+ Breaks down gluten in wheat, barley, rye, and casein in dairy products
+ 
+ DPP-IV (Dipeptidyl Peptidase-IV), specific to gluten and casein digestion
+ 
+ Complete carbohydrate digestion
+ 
+ Helpful for gluten intolerance
+ 
+
+ Ingredients 
+ v
+ Proteases 
+ v
+ Amylase 
+ - Alpha amylase
+ - Beta amylase
+ - Glucoamylase
+ v
+ DPP-IV
+ v
+ Lactase
+ v
+ Cellulase
+ v
+ Lipase
+ 
+
+ 
+ 
+ 
+ We do not manufacture the enzyme product above. It is specifically formulated for our distribution. It is packed under our private label pursuant to the contract manufacturing arrangements. The brand name ProCellax DG2 belongs to us, and trademark applications have been filed in the target markets.
+ 
+
+ It is a digestive enzyme for gluten relief, with DPP-IV, formulated to breakdown gluten and casein, as well as other difficult-to-digest proteins in modern foods. It helps relieve indigestion, gas, bloating, constipation and diarrhea caused by grain and dairy proteins. It utilizes an array of various proteases for high and low pH conditions of G1 tract. It is a dietary supplement. It comes in capsule form with each capsule 300 mg. There are 90 capsules per bottle.
+ 
+
+ 34 
+ 
+
+ 
+GEEC IMMUNE HEALTH ENZYME PRODUCTS
+ 
+
+ ProCellax FG1
+ 
+
+ 
+ Colon cleanse
+ 
+ Breaks down putrefying food matter in FG1 tract
+ 
+ Eliminates and prevents yeast overgrowth (Candida albicans)
+ 
+ Powerful probiotic and prebiotic
+ 
+ Supports colonization of microflora in colon
+ 
+ When putrefying food matter is present in digestive tract 
+ 
+ Promotes growth of harmful yeast and molds that can produce toxins
+ 
+ Allows harmful bacteria to flourish
+ 
+ Reduces digestive function, decreases absorption of essential nutrients 
+ 
+
+ 
+
+ ProCellax FG1: The Importance of Enzymes & Probiotics
+ 
+
+ 
+ Enzymes
+ "
+ Chitosanase, cellulase, glucanase
+ "
+ Attacks yeast and harmful bacteria growth in colon
+ 
+
+ 
+ Probiotics
+ "
+ Live microorganisms that are beneficial to the host
+ 
+
+ 
+ Prebiotics
+ "
+ Non-digestive food ingredients that stimulate the growth of beneficial bacteria
+ 
+
+ 
+ 
+
+ 
+ 
+ We do not manufacture the enzyme product above. It is specifically formulated for our distribution. It is packed under our private label pursuant to the contract manufacturing arrangements. The brand name ProCellax FG1 belongs to us.
+ 
+
+ It is a full-spectrum blend of probiotics, prebiotics and enzymes expertly formulated to help maintain a proper balance of intestinal microflora and may prevent the growth of Candida. It is a dietary supplement. It comes in capsule form with each capsule at 500 mg. There are 180 capsules per bottle.
+ 
+
+ 35 
+ 
+
+ 
+ProCellax - VDIHF
+ 
+
+ 
+ Inhibits pathogenic organisms
+ 
+ Reduces oxidative cellular damage
+ 
+ Supports normal detoxification processes
+ 
+ Supports and strengthens immune health
+ 
+
+ 
+
+ We do not manufacture the enzyme product above. It is specifically formulated for our distribution. It is packed under our private label pursuant to the contract manufacturing arrangements. The brand name ProCellax VDIHF belongs to us.
+ 
+ It is a blend of powerful systemic enzymes and antioxidant herbs to support normal cellular metabolism and optimal immune functions. It is a dietary supplement. It comes in capsule form with each capsule at 500 mg. There are 180 capsules per bottle.
+ 
+ 36 
+ 
+
+ 
+
+ GEEC SYSTEMIC ENZYME HEALTH PRODUCTS
+ 
+
+ ProCellax E
+ 
+
+ 
+ Full-strength formula
+ 
+ A powerful blend of proteases & herbs
+ 
+ Total body and inflammation support
+ 
+ Joint and tendon health
+ 
+ Recovery from muscle soreness
+ 
+
+ 
+ 
+
+ 
+
+ We do not manufacture the enzyme product above. It is specifically formulated for our distribution. It is packed under our private label pursuant to the contract manufacturing arrangements. The brand name ProCellax E belongs to us.
+ 
+
+ ProCellax E is a powerful systemic enzyme blend formulated to support normal fibrin metabolism and healthy response to inflammation. It features an enterically coated serrapeptase that can survive the acidic conditions of the stomach. It is a dietary supplement. It comes in capsule form with each capsule at 500 mg. There are 450 capsules per bottle.
+ 
+ 
+ 37 
+ 
+ 
+
+ ProCellax E2AF
+ 
+
+ 
+ Multi-vitamin component for muscle repair
+ 
+ Restoration of healthy fibrin levels in the blood
+ 
+ Supports recovery of injuries from sports, over-work and delayed onset muscle soreness
+ 
+ Supports healthy joint function
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ We do not manufacture the enzyme product above. It is specifically formulated for our distribution. It is packed under our private label pursuant to the contract manufacturing arrangements. The brand name ProCellax E2AF belongs to us.
+ 
+
+ ProCellax E2AF is a dietary supplement. Nutritional support for healthy joint function. An enzyme therapy solution for inflammation management. It comes in capsule form with each capsule 750 mg. There are 90 capsules per bottle.
+ 
+
+ 
+ 38 
+ 
+
+ 
+
+ 
+ ProCellax SNU
+ 
+
+ 
+ Professional strength protease blend
+ 
+ Supports normal blood pressure and circulatory health
+ 
+ Enhances the body s natural ability to avoid excess blood clotting
+ 
+ Potent anti-inflammatory activity
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+ We do not manufacture the enzyme product above. It is specifically formulated for our distribution. It is packed under our private label pursuant to the contract manufacturing arrangements. The brand name ProCellax SNU belongs to us.
+ ProCellax SNU is a powerful systemic enzyme blend formulated to support a healthy cardiovascular system and to maintain normal fibrin metabolism. It promotes healthy circulation by reducing excessive fibrin levels and reducing blood viscosity. It is a dietary supplement. It comes in capsule form with each capsule at 500 mg. There are 150 capsules per bottle.
+ 
+ 39 
+ 
+
+ 
+
+ ProCellax SP
+ 
+
+ 
+ 80,000 active units of Serrapeptase (SU)
+ 
+ Supports respiratory and sinus health by reducing mucus viscosity
+ 
+ Supports healthy tissue repair by reducing scar tissue 
+ 
+ Anti-inflammatory and Fibrinolytic activity
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+ We do not manufacture the enzyme product above. It is specifically formulated for our distribution. It is packed under our private label pursuant to the contract manufacturing arrangements. The brand name ProCellax SP belongs to us.
+ 
+
+ ProCellax SP Serrapeptase is enterically coated to survive the acidic conditions of the stomach. This allows for greater absorption in the small intestine and thus, greater fibrinolytic activity. It is a dietary supplement. It comes in capsule form with each capsule at 500 mg. There are 60 capsules per bottle.
+ 
+ 40 
+ 
+
+ 
+
+ ProCellax IN SACHET
+ 
+ 15 individual sachets packed with ProCellax DG1, ProCellax DG2 and ProCellax FG1 
+ 
+ Packed for convenience of travelling
+ 
+ Handy and easily accessible 
+ 
+
+ Individual sachet 
+ 
+ 
+ 
+ 
+
+Convenient travel pack
+
+ 
+
+ 41 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 42 
+ 
+
+ 
+
+ PROCELLAX RANGE OF ENZYME PRODUCTS IN CAPSULE
+ 
+
+ 
+ Enzyme for Animal Consumption
+ 
+ 
+ 
+ 
+ 
+
+ We do not manufacture the enzyme product above. It is specifically formulated for our distribution. It is packed under our private label pursuant to the contract manufacturing arrangements. The brand name ProAnilax EPET belongs to us, and trademark applications have been filed in the target markets.
+ 
+
+ ProAnilax EPET is a multi-enzyme blend of non-animal source enzymes containing a combination of proteases and other enzymes to facilities movement as well as tissue and muscle healing.
+ The product is specially formulated for the digestive system of dogs and cats. It is packed in a carton box, each 20 kgs. 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+ We do not manufacture the enzyme product above. It is specifically formulated for our distribution. It is packed under our private label pursuant to the contract manufacturing arrangements. The brand name ProAnilax SP3 belongs to us, and trademark applications have been filed in the target markets.
+ 
+
+ ProAnilax SP3 is a product is specially formulated for the digestive system of dogs and cats. It provides natural relief such as dry or scaly hair coat, skin problems, digestive disorders, joint difficulties, immune disorders, excessive shedding, weight problems, allergies, bloating, lethargy, hairballs, flatulence, coprophagia and wound healing. 
+ 
+
+ It is packed in a carton box, each 20 kgs. 
+ 
+
+ 
+ 43 
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+
+ We do not manufacture the enzyme product above. It is specifically formulated for our distribution. It is packed under our private label pursuant to the contract manufacturing arrangements. The brand name ProAnilax SW1013 belongs to us, and trademark applications have been filed in the target markets.
+ 
+
+ ProAnilax SW1013 is a unique blend of enzymes developed especially for swine feed supplementation.
+ The enzymes encompassing a wide range of activities, aid in the breakdown of organic feed substrates, thereby encouraging the bio-availability of otherwise trapped nutrients, while improving live weight and feed conversion efficiency (feed: gain) in diets based on barley, corn, soybean meal, sunflower meal, wheat meal, rapeseed meal and others. Bio-availability, in pharmacology, is used to describe the function of the administered dose of unchanged drug that reaches the systemic circulation.
+ 
+
+ It is packed in a carton box, each 20 kgs. 
+ 
+
+ 
+ 44 
+ 
+
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+ 
+
+ 
+ We do not manufacture the enzyme product above. It is specifically formulated for our distribution. It is packed under our private label pursuant to the contract manufacturing arrangements. The brand name ProAnilax SEB belongs to us, and trademark applications have been filed in the target markets.
+ 
+
+ ProAnilax SEB is a unique blend of enzymes developed especially for poultry feed supplementation. The enzymes encompassing a wide range of activities, aid in the breakdown of organic feed substrates, thereby encouraging the bio-availability of otherwise trapped nutrients, while improving live weight and feed conversion efficiency (feed: gain) in diets based on barley, corn, soybean meal, sunflower meal, wheat meal, rapeseed meal and others. 
+ 
+
+ It is packed in a carton box, each 20 kgs. 
+ 
+
+ 
+ 45 
+ 
+
+ 
+ 
+
+ 
+
+ 
+ 
+
+ 
+
+ We do not manufacture the enzyme product above. It is specifically formulated for our distribution. It is packed under our private label pursuant to the contract manufacturing arrangements. The brand name ProAnilax AFL2500 belongs to us, and trademark applications have been filed in the target markets.
+ 
+
+ ProAnilax AFL2500 is a highly concentrated, non-animal, liquid multi-enzyme blend derived from non-GMO Trichoderma spp. It is specially designed to maximize the digestibility and nutritional value of pelletized feed, silage and other forms of ruminant feed.
+ 
+
+ It is packed in a carton box, each 20 kgs. 
+ 
+
+ 
+
+ 
+ 
+
+ 
+
+ OUR RANGE OF ENZYME PRODUCTS FOR ANIMAL CONSUMPTION
+ 
+
+ 
+ 46 
+ 
+ 
+
+ Sales and Marketing
+ 
+
+ GEEC Website
+ 
+
+ Our website, www.geecenzymes.com is in operation. It is linked to our wholly owned subsidiary in Singapore, Genufood Enzymes (S) Pte Ltd s website: www.genufoodenzymes.com.sg
+ 
+
+ We have a dedicated team of information technology specialists who are responsible for the development and maintenance of GEEC Group websites, managing the consumer-facing website product internet sales and the infrastructure necessary to support regional coverage.
+ 
+
+ It is Live and available 24 hours a day, seven days a week allowing customer service to be provided to dealers, consumers and GEEC Enzyme Club Members to shop online from their home, office or even from their mobile phone.
+ 
+
+ Marketing
+ 
+ We have entered into an Agreement with Access Management Consulting in Singapore appointing them as our Sole Marketing Agent in sourcing and to contact as many Sole Country Distributors in the target markets to market our range of enzyme products. We intend to rely on our Sole Marketing Agent to perform this task as it will save us from incurring upfront marketing costs.
+ 
+
+ Advertising
+ 
+
+ Our marketing strategy is to communicate directly with potential customers, GEEC Enzyme Club Members and to emphasize our specialty and quality enzyme products embodied in our corporate slogan, Eat Right, Long Life . In doing so, we intend to engage external consultants to execute necessary media advertising and the design, production and distribution of promotional materials such as direct mailers, leaflets and brochures, for our target customer groups. We also intend to continue to advertise our ProCellax and ProAnilax range of enzyme products on our websites, through internet, in print media, radio and television advertisement. 
+ 
+
+ Competition - Taiwan
+ 
+ The enzyme market in Asia is still a virgin market. The public is aware about medicine, drug, herb and vitamin pills but not enzyme. We plan to enter the enzyme business with a chance to be the leader in the distribution of enzyme products in Asia. Our initial target market, Taiwan, there is no enzyme product similar to our ProCellax range of enzyme products for human consumption (Adult) and ProAnilax range of enzyme products for Animal Consumption. Notable enzyme manufacturers like Kuo-Chi Biotechnology Corp produce enzymes for Chinese herbal health products; Linden Biological Technology Co Ltd produce enzymes for cosmetics; Easy Cure Biotechnology Co Ltd produces enzymes as nutrition supplements added with vitamins and minerals under the brand Lohas , and China Chemical Pharmaceutical Co Ltd produce enzymes mixed with additives as a feed for animals. Imported brands like NOW, which is a plant-based enzyme product from the US is perhaps the only imported enzyme product promoting in Taiwan.
+ 
+ Competition Singapore
+ 
+
+ There is no enzyme factory producing enzyme products in Singapore, but there are a number of importers of health/dietary supplements. We intend to focus and concentrate our operations in Singapore through our wholly owned subsidiary, Genufood Enzymes (S) Pte Ltd ( GESPL ). There are no enzyme products similar to ProCellax and ProAnilax range of enzyme products in Singapore. Known health supplements near to true enzyme products in Singapore are Ultimate Digestive Enzyme Blend from UDO s choice; Vegan Digestive Support from DEVA; and Natural Brand Super Digestive Enzymes from GNC. Our ProCellax range of enzyme products are specifically formulated for our distribution with ingredients of proprietary rights. These ingredients and the formula would make the enzymes work to produce the desired result. We intend to spearhead ProCellax DG1 into the Singapore market. We claim ingredients Peptizyme SP (Serrapeptase) and Alpha-Galactosidase are special ingredients selected for our ProCellax DG1, for optimal and complete digestion. We would price ProCellax DG1 reasonably within the means of all Singapore consumers.
+ 
+
+ We intend to penetrate into the Singapore market with the establishment of 10 GEEC Retail Chain Stores with the view to service the Singapore consumers and GEEC Enzyme Club Members better. We face competition with other retail chain store operators that sell health supplements in Singapore. There are seven established chain store operators in Singapore as shown in the chart below:
+ 
+
+ 47 
+ 
+
+ 
+ 
+
+ Health Supplements Retail Chain Store Operators in Singapore Chart
+ 
+
+ No.
+ Organization s Name 
+ No. of Stores
+ Chain Store Type
+
+ 1.
+ Guardian Health & Beauty 
+ 152 
+ Pharmacy Chain Store
+
+ 2.
+ Watsons Personal Care Store
+ 105
+ Pharmacy Chain Store
+
+ 3.
+ Holland & Barrett 
+ 23
+ Health Supplements Chain Store
+
+ 4.
+ Unity Health Care 
+ 50
+ Pharmacy Chain Store
+
+ 5.
+ GNC 
+ 61
+ Health Supplements Chain Store
+
+ 6.
+ Nature s Farm 
+ 21
+ Health Supplements Chain Store
+
+ 7.
+ Sunrider 
+ 10
+ Health Supplements Chain Store
+
+ 
+ 
+ To compete in retail store management, we plan to have 34 items of products (SKU) for display and retail at our GEEC Retail Chain Store at Suntec City Mall, Singapore. These items will comprise of ProCellax range of enzyme products, Ayala s Herbal Water range of drinking water, PrOmega-3 range, NATfresh range of drinking water, weight management products, prostate health products, healthy aging products, and liquid multi-vitamins products. We may not achieve the number of required retail store and SKU if we do not have the financial means. 
+ 
+
+ Sales Promotion Activities
+ 
+
+ We intend to execute a GEEC Enzyme Club Membership drive plan through the GEEC Retail Chain Store at Suntec City Mall, Singapore from September 1, 2013 to January 5, 2014 with a lucky draw campaign slogan CASH SGD10,000 FOR YOU . The prizes for the lucky draw campaign are:
+ 
+
+ 
+ First Prize 
+ (1 winner only) 
+ -
+ Cash SGD10,000 plus one complete set of ProCellax range of enzyme products and one carton TaniNZ Premium 1500 ml pure natural artesian water.
+
+ 
+ Second Prize 
+ (1 winner only) 
+ -
+ Cash SGD5,000 plus one complete set of ProCellax range of enzyme products and one carton TaniNZ Premium 1500 ml pure natural artesian water.
+ 
+
+ 
+ Third Prize 
+ (1 winner only) 
+ -
+ Two sets of ProCellax range of enzyme products, one carton TaniNZ Premium 1500 ml pure natural artesian water and one carton of Ayala s Herbal Water Sparkling Water 750 ml (Lemongrass Mint Vanilla, Cinnamon Orange Peel and Ginger Lemon Peel).
+ 
+
+ 
+ Fourth Prize 
+ (1 winner only) 
+ -
+ One set of ProCellax range of enzyme products plus one carton TaniNZ Premium 500 ml pure natural artesian water and one carton of Ayala s Herbal Still Water 475 ml (Lemongrass Mint Vanilla, Cinnamon Orange Peel, Ginger Lemon Peel, Lavender Mint and Cloves Cardamom Cinnamon). 
+ 
+
+ 
+ Consolation Prize
+ (10 winners only) 
+ -
+ One carton TaniNZ Premium 500 ml pure natural artesian water plus one box with 15 sachets of ProCellax DG1.
+ 
+
+ On July 11, 2013, GESPL has filed the Notification to Conduct Lucky Draw under the Common Gaming Houses (Exemption) Notification 1996 to the Singapore Head of Gambling Suppression Branch, Specialized Crime Division, Criminal Investigation Department to comply with the legal requirements. The Notification Reference Number is 1145/2013. 
+ 
+ 48 
+ 
+
+ The Lucky Draw Campaign: CASH SGD10,000 FOR YOU 
+ 
+
+ 
+
+ 
+ 
+
+ 
+
+ We also intend to launch a sales promotion program into the Singapore market to stimulate sales in conjunction with the official opening of our GEEC Retail Chain Store at Suntec City Mall, Singapore, as follows:
+ 
+
+ 
+ Internet Sales Promotions for ProCellax range of enzyme products
+ 
+
+ Members First bottle to enjoy a 25% discount. Second bottle to enjoy a 50% discount
+ 
+
+ Non Members First bottle has no discount. Second bottle to enjoy a 50% discount
+ 
+
+ 
+ Retail Store Promotions
+ 
+
+ For every first 100 customers per day: Buy one bottle ProCellax, get one bottle ProCellax free.
+ 
+
+ For each day lasting up to August 18, 2013 midnight, the highest spender at our GEEC Retail Chain Store at Suntec City Mall, Singapore is entitled to a complimentary set of ProCellax products purchased. One winner per date. 
+ 
+
+ Up to August 18, 2013, Week-end (Friday to Sunday) GEEC Enzyme Club Membership drive program. Sign up as a new member; he/she is entitled to an instant lucky draw to win a ProCellax product.
+ 
+
+ All inventories for promotion are subject to while stock lasts . 
+ 
+
+ Our subsidiary company, GESPL had on July 24, 2013 entered into an agreement with Standard Chartered Bank, Singapore to participate in the Standard Chartered Bank Lifestyle Programme for a period of one year ending July 31, 2014. We are bound to provide a 20% discount on our ProCellax range of enzyme products to Standard Chartered Bank credit and debit card holders and an additional 10% discount if their credit or debit card holders are also a member of the GEEC Enzyme Club. Standard Chartered Bank has 650,000 cardholders.
+ 
+
+ GESPL also had on October 17, 2013 entered into an agreement with Network For Electronic Transfers (Singapore) Pte Ltd ( NETS ) to subscribe to the System of payment for our products sold at the GEEC Retail Chain Store at Suntec City Mall, Singapore and to grant a 20% rebate to NETS members. The agreement is for an initial term of twenty four months with option for another twelve months upon expiry of the initial term. There are more than 8 million NETS users in Singapore.
+ 
+
+ We also intend to promote ProCellax range of enzyme products to the Retailers Medical Clinics by making available the following promotions:
+ 
+ Existing retailers The minimum order quantity is set at 24 bottles to qualify for 24 bottles of ProCellax for free.
+ 
+
+ New retailers The minimum order quantity is set at 6 bottles to qualify for 6 bottles of ProCellax for free. 
+ 
+ We intend to penetrate into the Singapore market by the establishment of our presence with strong brand awareness but we possess limited financial capabilities at this current time. We may never to able effectively enter the enzyme business and thus may not be in a position to compete with competitors who entered the market with strong financial means.
+ 
+ 49 
+ 
+
+ 
+Compliance with Government Regulation 
+ 
+
+ We currently do not have substantial operations. However, once we do have a substantial operation, our business will be affected by numerous laws and regulations. To ensure that our operations are conducted in full and substantial regulatory compliance, as part of our current internal procedures and policies, we will verify and ensure that the OEM manufacturers we contracted in the US have obtained the ISO 9001:2000 or GMP certification and to qualify for the Singapore as well as the target markets health food supplement regulation. In Singapore, enzyme products are classified as Health Supplements and paragraph 6 of the Health Supplements Guidelines issued by the Health Sciences Authority, Singapore ( HSA ) states that [c]urrently, health supplements are not subjected to premarket approvals and licensing for their importation, manufacture and sales in Singapore. The onus of responsibility for the safety and quality of health supplements rests with the dealers (importers, manufacturers, wholesaler dealers) and sellers On June 1, 2012, Agri-Food & Veterinary Authority, Singapore ( AVA ) has advised that they have no objection to our import and sale of the following feed supplements by our Singapore subsidiary company, Genufood Enzymes (S) Pte Ltd ( GESPL ) for ProAnilax SW1013, ProAnilax SP3, ProAnilax SEB, ProAnilax EPET, and ProAnilax AFL2500. Failure to comply with any laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of injunctive relief or both. Moreover, changes in any of these laws and regulations could have a material adverse effect on business. In view of the many uncertainties with respect to current and future laws and regulations, including their applicability to us, we cannot predict the overall effect of such laws and regulations on our future operations.
+ 
+
+ Currently we do not have substantial operations and believe that once we do have substantial operations, we will comply in all material respects with applicable laws and regulations, and that the existence and enforcement of such laws and regulations have no more restrictive an effect on our operations than on other similar companies in the enzyme industry. We do not anticipate any material capital expenditures to comply with federal and state environmental requirements.
+ 
+
+ Employees
+ 
+
+ We currently have fourteen employees directly or indirectly including those employees from our wholly subsidiary in Singapore, Genufood Enzymes (S) Pte Ltd ( GESPL ). Our President and Principal Accounting Officer each devotes approximately 40 hours per week to our operations. To assist the President, we have entered into an agreement with Access Management Consulting and Marketing Pte Ltd to provide accounting, finance, treasury, corporate secretarial, human resource and information technology services.
+ 
+
+ Research and Development Expenditures
+ 
+
+ We have not incurred any expenditure on research and development since our inception.
+ 
+
+ Subsidiaries
+ 
+
+ We have two wholly owned subsidiaries. Genufood Enzymes (S) Pte Ltd in the Republic of Singapore and Genufood Enzymes Lanka (Pvt) Ltd in the Republic of Sri Lanka. Genufood Enzymes Lanka (Pvt) Ltd is formerly known as GEEC Internet Sales (Pvt) Ltd. 
+ 
+
+ Patent and Trademarks
+ 
+
+ We do not own any patent but the following trademarks belong to us:
+ 
+ GEEC
+ ProCellax
+ ProAnilax
+ ProBrew
+ 
+
+ Offices
+ 
+
+ Our business office is located at Two Allen Center, 1200 Smith Street, Suite 1600, Houston, TX 77002, United States of America. Our telephone number is + 1 713 353 8834. We pay rent for our office monthly for $219 excluding taxes. We had a lease agreement with Regus Management Group, LLC to provide this virtual office with secretarial services. We also have a virtual office located at 601 South Figueroa Street, Suite 4050, Los Angeles, CA 90017, United States of America. Our telephone number is +1 213 330 4275. We pay rent for our office monthly for a total of $335 excluding taxes. We had a lease agreement with Servcorp Los Angeles to provide this virtual office with secretarial services. 
+ 
+
+ 50 
+ 
+
+Legal Proceedings
+ 
+
+ We are currently a party to two legal proceedings. The first legal proceedings is a civil claim we filed on March 14, 2013 in the District Court in the District of Nevada against Taiwan Cell Energy Enzymes Corp ( TCEEC ) for breach of contract under clause 13.3.4.2 of the Sole Distributorship Agreement (General Outlet-Human Consumption) Case 2:13-cv-00435-RCJ-CWH. On April 30, 2013, the District Court in the District of Nevada entered a default against TCEEC and on May 17, 2013, a Motion for Default Judgment against TCEEC was filed. The second legal proceedings, is a criminal complaint we filed on June 21, 2013 with the Taiwan Public Prosecutors Office against Chen Wen Hsu and Pi Lien Peng for breach of fiduciary duty, forgery and fraudulent misrepresentation. 
+ 
+
+ Our address for service of process in Nevada is 4421 Edward Avenue, Las Vegas, Nevada 89108.
+ 
+
+ Market for Common Equity and Related Stockholder Matters
+ Market Information
+ 
+There is a limited public market for our common shares. Our common shares are quoted on the OTC Bulletin Board under the symbol GFOO . Trading in stocks quoted on the OTC Bulletin Board is often thin and is characterized by wide fluctuations in trading prices due to many factors that may be unrelated to a company s operations or business prospects. We cannot assure you that there will be a market in the future for our common stock.
+ OTC Bulletin Board securities are not listed or traded on the floor of an organized national or regional stock exchange. Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers in stocks. OTC Bulletin Board issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.
+ Our common stock became eligible for quotation on the OTC Bulletin Board on June 5, 2012. As of October 31, 2013, only a minimal amount of shares have traded on the OTCBB and the market price for our common shares is $0.05 per share.
+ 
+ Stockholders of Our Common Shares
+ 
+As of October 31, 2013, there were approximately 138 holders of record of our common stock.
+ 
+Rule 144 Shares 
+ 
+The SEC has recently adopted amendments to Rule 144 which became effective on February 15, 2008 and applies to securities acquired both before and after that date. Under these amendments, a person who has beneficially owned restricted shares of our common stock for at least six months is entitled to sell their securities provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding the sale and (ii) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale. 
+ 
+
+ Persons who have beneficially owned restricted shares of our common stock for at least six months but who are our affiliates at the time of, or at any time during the three months preceding the sale, are subject to additional restrictions. Such person is entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of the following: 
+ 
+
+ 
+ 1% of the total number of securities of the same class then outstanding, which will equal 3,942,460 shares as of the date of this prospectus; or
+ 
+
+ 
+ the average weekly trading volume of such securities during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale;
+ 
+
+ Provided, in each case that we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale. 
+ 
+ Such sales must also comply with the manner of sale and notice provisions of Rule 144. 
+
+ As of the date of this prospectus none of our shares are eligible for resale pursuant to Rule 144.
+ 
+Stock Option Grants 
+ 
+To date, we have not granted any stock options. 
+ 
+Registration Rights 
+ 
+We have not granted registration rights to the selling shareholders or to any other persons. 
+ 
+ 51 
+ 
+
+ Dividends
+ There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend: 
+ 1.
+ We would not be able to pay our debts as they become due in the usual course of business; or
+ 
+
+ 2.
+ Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.
+ We have not declared any dividends, and we do not plan to declare any dividends in the foreseeable future. 
+ Plan of Operation
+ 
+
+ Our plan of operation for the next twelve months following the date of this prospectus is to focus and concentrate on the Singapore market where our wholly owned subsidiary, Genufood Enzymes (S) Pte Ltd ( GESPL ) operates. We intend to promote, market and distribute our range of enzyme products in Singapore through the establishment of ten GEEC Retail Chain Stores.
+ 
+
+ We expect to incur the following expenses in the next 12 months in connection with our business operations:
+ 
+
+ Stage 1 Operations
+ 
+
+ Establishment of 10 GEEC Retail Chain Stores
+ $1,126,970
+ Working capital requirement
+ $1,738,030
+ Manager fee for the Issue
+ $135,000
+ 
+ 
+ On November 4, 2013, we had $982,598 cash on hand to part finance the Stage 1 operations, that is, to set-up the first GEEC Retail Chain Store at Suntec City Mall, Singapore, purchase inventory of ProCellax range of enzyme products for distribution in the Republic of Singapore and employment of suitable qualified personnel to manage and run the GEEC Retail Chain Store. There is $500,000 cash to be collected by end of December, 2013 from an investor in respect of his commitment under a promissory note in the purchase of our IPO shares, but there is no guarantee that he will not breach this payment.
+ 
+ Currently our monthly burn rate is approximately $114,500. However, this number is not an accurate reflection of our actual monthly cash requirement, as it will likely to be much higher once we have the 10 GEEC Retail Chain Stores in operations. Currently we have enough cash on hands to sustain our operations for approximately 8.58 months.
+ 
+ On March 11, 2013, we entered into a Term Sheet with Kodiak Capital Group, LLC for their investment in our business for a maximum of $3 million. On July 1, 2013, we sign the Investment Agreement and Registration Rights Agreement with Kodiak Capital Group, LLC. On July 26, 2013, we filed the form S-1 with the SEC and on August 8, 2013, SEC declared the registration statement effective. To-date, we have not issued a Put order against Kodiak Capital Group, LLC for the financing. 
+ On October 3, 2013, we entered into an Equity Purchase Agreement Term Sheet with Southridge Partners II LP to purchase common shares of the Company of $20 million over a period of 2 years. On October 17, 2103, we signed the Equity Purchase Agreement and Registration Rights Agreement including a Promissory Note for $125,000 due on May 31, 2014 with Southridge Partners II LP. 
+ 
+
+ 52 
+ 
+We intend to use the funds from Southridge Partners II LP to finance the acquisition of a small factory in Singapore for the packaging of our ProCellax range of enzyme products. This will enable us to enjoy a lower cost of production for ProCellax range of enzyme products. The sachet packing material cost, plastic bottle cost, printing cost and labor cost will be much cheaper in South East Asia than in the United States of America. Sample of ProCellax in sachet is shown below: 
+ 
+
+ 
+
+ ProCellax DG1, ProCellax DG2 and ProCellax FG1 in Sachet
+ 
+ 
+ 
+ 
+ 
+
+ 
+
+ 
+
+ ProCellax DG1 and ProCellax DG2 & ProCellax FG1 in Box of 15 Sachets
+ 
+
+ 
+ 
+ 
+ 
+ We also intend to utilize the funds from Southridge to finance the ProAnilax Prepacking Plant operations in Sri Lanka. This will enable us to repack ProAnilax range of enzyme products for animal consumption into smaller packing size for distribution in Sri Lanka and for export. Presently, ProAnilax is bulk-pack each type weight 20 kgs. Packaging cost, printing cost, labor cost and transportation cost is much cheaper in Sri Lanka. Sri Lanka has agriculture industry and is one of our target markets for ProAnilax. 
+ 
+
+ At present time, we do not have sufficient cash to go into the Repacking ProCellax in Sachet Plant operations in Singapore as well as the Repacking ProAnilax Plant operations in Sri Lanka. If we were to proceed with these operations, additional financing is required whether through public or private equity or debt financing, arrangements with security holders or other sources to fund operations, but may not be available, or if available, may be on terms unacceptable to us.
+ 
+
+ We entered into a Manager Service Consulting Agreement on October 28, 2013 with Access Finance and Securities (NZ) Limited of Level 31, Vero Centre, 48 Shortland Street, Auckland 1140, New Zealand (AFS) to provide management and consulting services related to the following: sourcing, evaluation and making recommendation to the suitable professionals or consultants for the Team for the S-1 registration statement; organizing, coordination and monitoring work schedule of the Team members; Consulting and determination of strategy for the Offering; advising and reviewing of business plan and S-1 registration statement including amendments thereof; advising on the SEC comment letters and participation in the response strategy and provision of answer; advising and to structure the Offering Shares; and attending meetings as from time to time required all in the capacity as the Advisor to the Issuer and Manager for the Issue. A copy of the Advisor to the Issuer agreement is filed as an exhibit to this registration statement. Pursuant to this agreement, we incurred $400,000 (NZD500,000) in general and administrative fees to be paid in cash.
+ 
+
+ We have also entered into a Prospectus Service Agreement on October 28, 2013 with Access Management Consulting and Marketing Pte Ltd (AMCM) of Six Battery Road #38-05, Singapore 049909 (AMCM). The business activities undertaken by AMCM include the drafting and preparation of a business plan for us and for the inclusion into the S-1 registration statement; reviewing and advising on the modification and amendments of the business plan for the Form S-1; attending and providing answers to auditors enquires; discussion, consulting and taking instructions from the auditors, securities lawyers and Advisor to the Issuer to update, modify and amend the business plan and hence the S-1 registration statement. A copy of this agreement is filed as an exhibit to this registration statement. Pursuant to this agreement, we incurred $500,000 (SGD625,000) in general and administrative fees to be paid in cash.
+ 
+
+ We have also entered into various bookkeeping, accounting and corporate secretarial services with AMCM since inception. The services include the provision of bookkeeping and accounting services including the preparation of financial statements in accordance to US GAAP and input the Financial Footnote and Subsequent Event disclosure; provision of corporate secretarial services include the drafting and preparation of board and shareholders resolutions, board and shareholders meetings; and liaise with attorney in respect of trademark applications and maintaining trademark reports and registries. Fees are paid in accordance to time charge and a minimum base fee applicable to certain services.
+ 
+
+ We have enough cash on hand to sustain part of our Stage 1 operations Internet Sales, distribution of our ProCellax range of enzyme products in Singapore and establishment of GEEC Retail Chain Store at Suntec City Mall, Singapore. We do not have sufficient cash to establish the other planned nine retail chain stores and Stage 2 operations Sri Lanka. We will need to issue a Put order against Southridge Partners II, LP for the financing, but there is no guarantee that Southridge Partners II, LP will not breach the Term Sheet or Equity Purchase Agreement.
+ 
+ 53 
+ 
+
+ Results of Operations
+ 
+
+ Results of Operations for the year ended September 30, 2012 compared to the year ended September 30, 2011 and from inception to September 30, 2012
+ 
+
+ Working Capital
+ 
+
+ 
+ June 30,
+ September 30,
+ September 30,
+
+ 
+ 2013
+ 2012
+ 2011
+
+ 
+
+ $
+ $
+ $
+
+ Current Assets 
+ 978,212
+ 1,272,772
+ 571,125
+
+ Current Liabilities 
+ 130,298
+ 140,386
+ 83,442
+
+ Working Capital Surplus 
+ 847,914
+ 1,132,386
+ 487,683
+
+ 
+
+ 
+
+ Cash Flows
+ 
+ Nine months ended 
+ June 30,
+ Year ended September 30,
+ Year ended September 30,
+
+ 
+
+ 2013
+ 2012
+ 2011
+
+ 
+
+ $
+ $
+ $
+
+ Cash Flows from (used in) Operating Activities 
+ (1,030,712)
+ (531,730)
+ (174,106)
+
+ Cash Flows from (used in) Investing Activities 
+ (10,378)
+ (9,401)
+ (28,525)
+
+ Cash Flows from (used in) Financing Activities 
+ 588,246
+ 1,168,405
+ 708,106
+
+ Effect of exchange rate changes on cash during period
+ (16,231)
+ (4,111)
+ (388)
+
+ Net Increase (decrease) in Cash During Period 
+ (469,075)
+ 623,163
+ 505,087
+
+ 
+
+ Revenues
+ 
+
+ During the nine months ended June 30, 2013 we earned revenues of $121,640, compared to revenues of $0 for the nine month ended June 30, 2012. From inception to June 30, 2013, we have earned total revenues of $303,191.
+ 
+
+ Cost of Goods Sold and Gross Margin
+ 
+ During the nine months ended June 30, 2013 we spent a total of $65,302 on cost of goods sold, compared to $0 for the nine months ended June 30, 2012. From inception to June 30, 2013, we have spent $178,025 on cost of goods sold.
+ 
+ During the nine months ended June 30, 2013, our gross margin was $56,338, compared to $0 for the nine months ended June 30, 2012. From inception to June 30, 2013, our gross margin was $125,166.
+ 
+
+ Operating Expenses and Net Loss
+ 
+
+ During the nine months ended June 30, 2013, we incurred operating total expenses of $892,898 compared with total operating expenses of $243,434 during the nine months ended June 30, 2012. From inception to June 30, 2013 we have incurred total operating expenses of $1,934,567.
+ 
+
+ For the nine months ended June 30, 2013, we incurred a net loss of $828,765 compared with a net loss of $242,477 for the nine months ended June 30, 2012. From inception to June 30, 2013, we incurred a net loss of $1,799,847.
+ 
+
+ Liquidity and Capital Resources
+ 
+
+ As at June 30, 2013, we had a cash balance of $697,852 and total assets of $1,064,385 compared with $562,377 of cash and total assets of $657,687 as at June 30, 2012. The increase in cash was due to proceeds received from the issuance of common shares and the increase in total assets was due to the acquisition of inventory. 
+ 
+
+ As at June 30, 2013, we had total liabilities of $130,298 compared with total liabilities of $69,679 at June 30, 2012. The increase in total liabilities was attributed to accounts payable to a related party as well as accrued expenses. As at June 30, 2013, we had a working capital surplus of $847,914 compared with a working capital surplus of $544,578 as at June 30, 2012. The increase in working capital surplus was due to our increased cash holdings during the year.
+ 
+
+ Cashflow from Operating Activities
+ 
+
+ During the nine months ended June 30, 2013, we used cash of $1,030,712 for operating activities as compared to use of $288,725 during the nine months ended June 30, 2012. The increase in cash used for operating activities during the year was due to payment of outstanding day-to-day obligations incurred during the year. 
+ 
+ Cashflow from Investing Activities
+ 
+
+ During the nine months ended June 30, 2013 we used cash of $10,378 in investing activities compared to use of $7,147 during the nine months ended June 30, 2012.
+ 
+
+ Cashflow from Financing Activities
+ 
+
+ During the nine months ended June 30, 2013, we received proceeds of $588,246 from financing activities compared with $318,405 during the nine months ended June 30, 2012. The increase is attributed to proceeds from sales of common shares. 
+ 
+
+ Off-Balance Sheet Arrangements
+ 
+ We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
+ 
+ 54 
+ 
+
+ Results of Operations for the year ended September 30, 2013 compared to the year ended September 30, 2012 and from inception to September 30, 2013
+ 
+
+ Working Capital
+ 
+
+ 
+
+ 
+
+ 
+ September 30,
+ September 30,
+
+ 
+ 2012
+ $
+ 2011
+ $
+
+ Current Assets 
+ 1,272,772
+ 571,125
+
+ Current Liabilities 
+ 140,386
+ 83,442
+
+ Working Capital Surplus 
+ 1,132,386
+ 487,683
+
+ 
+
+ Cash Flows
+ 
+
+ 
+
+ 
+
+ 
+ Year ended September 30,
+ 2012
+ $
+ Year ended September 30,
+ 2011
+ $
+
+ Cash Flows from (used in) Operating Activities 
+ (531,730)
+ (174,106)
+
+ Cash Flows from (used in) Investing Activities 
+ (9,401)
+ (28,525)
+
+ Cash Flows from (used in) Financing Activities 
+ 1,168,405
+ 708,106
+
+ Effect of exchange rate changes on cash during period
+ (4,111)
+ (388)
+
+ Net Increase (decrease) in Cash During Period 
+ 623,163
+ 505,087
+
+ 
+
+ Revenues
+ 
+
+ During the year ended September 30, 2012 we earned revenues of $60,993, compared to revenues of $120,558 for the year ended September 30, 2011. From inception to September 30, 2012, we have earned total revenues of $181,551.
+ 
+
+ Cost of Goods Sold and Gross Margin
+ 
+ During the year ended September 30, 2012 we spent a total of $43,168 on cost of goods sold, compared to $69,555 for the year ended September 30, 2011. From inception to September 30, 2012, we have spent $112,723 on cost of goods sold.
+ 
+
+ During the year ended September 30, 2012, our gross margin was $17,825, compared to $51,003 for the year ended September 30, 2011. From inception to September 30, 2012, our gross margin was $68,828.
+ 
+
+ Operating Expenses and Net Loss
+ 
+
+ During the year ended September 30, 2012, we incurred operating total expenses of $461,776 compared with total operating expenses of $555,956 during the year ended September 30, 2011. From inception to September 30, 2012 we have incurred total operating expenses of $1,041,669.
+ 
+
+ For the year ended September 30, 2012, we incurred a net loss of $442,755 compared with a net loss of $504,381 for the year ended September 30, 2011. From inception to September 30, 2012, we incurred a net loss of $971,082.
+ 
+
+ Liquidity and Capital Resources
+ 
+
+ As at September 30, 2012, we had a cash balance of $1,166,927 and total assets of $1,341,493 compared with $543,764 of cash and total assets of $599,332 as at September 30, 2011. The increase in cash was due to proceeds received from the issuance of common shares and the increase in total assets was due to the acquisition of inventory. 
+ 
+
+ As at September 30, 2012, we had total liabilities of $140,386 compared with total liabilities of $83,442 at September 30, 2011. The increase in total liabilities was attributed to accounts payable to a related party as well as accrued expenses. As at September 30, 2012, we had a working capital surplus of $1,132,386 compared with a working capital surplus of $487,683 as at September 30, 2011. The increase in working capital surplus was due to our increased cash holdings during the year.
+ 
+
+ Cashflow from Operating Activities
+ 
+
+ During the year ended September 30, 2012, we used cash of $531,730 for operating activities as compared to use of $174,106 during the year ended September 30, 2011. The increase in cash used for operating activities during the year was due to payment of outstanding day-to-day obligations incurred during the year. 
+ 
+ Cashflow from Investing Activities
+ 
+
+ During the year ended September 30, 2012 we used cash of $9,401 in investing activities compared to use of $28,525 during the year ended September 30, 2011.
+ 
+
+ Cashflow from Financing Activities
+ 
+
+ During the year ended September 30, 2012, we received proceeds of $1,168,405 from financing activities compared with $708,106 during the year ended September 30, 2011. The increase is attributed to proceeds of $888,700 from the issuance of common shares and $279,705 in capital contribution by shareholders. 
+ 
+
+ Off-Balance Sheet Arrangements
+ 
+ We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
+ 
+
+ 55 
+ 
+
+Results of Operations for the three months ended June 30, 2013 compared to the three months ended June 30, 2012 and from inception to June 30, 2013. 
+ 
+
+ Limited Revenues
+ 
+
+ Since our inception on June 21, 2010 to June 30, 2013, we have earned limited revenue of $303,191. As of June 30, 2013, we have an accumulated deficit of $1,799,847 and we did earn revenues of $107,686 during the three months ending on June 30, 2013. At this time, our ability to generate any significant revenues continues to be uncertain. Our financial statements contain an additional explanatory paragraph in Note 3, which identifies issues that raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustment that might result from the outcome of this uncertainty.
+ 
+ Net Loss
+ 
+
+ We incurred a net loss of $172,716 for the three months ended June 30, 2013, compared to a net loss of $116,108 for the same period in 2012. This increase in net loss is mostly due to increased operating expenses. From inception on June 21, 2010 to June 30, 2013, we have incurred a net loss of $1,799,847. Our basic and diluted loss per share was ($0.00) for the three months ended June 30, 2013, and ($0.00) for the same period in 2012. 
+ 
+
+ Expenses
+ 
+
+ Our total operating expenses increased from $116,441 to $225,556 for the three months ended June 30, 2013 compared to the same period in 2012. This increase in expenses is due to higher operating expenses. Since our inception on June 21, 2010 to June 30, 2013, we have incurred total operating expenses of $1,934,567.
+ 
+
+ Our professional fees, consisting primarily of legal, accounting and auditing fees, increased by $65,500 to $145,052 for the three months ended June 30, 2013 from $79,552 for the same period in 2012, mainly due to increased legal and auditing services provided in the three month period ended June 30, 2013. Since our inception on June 21, 2010 until June 30, 2013 we have spent $838,044 on professional fees.
+ 
+
+ Results of Operations for the nine months ended June 30, 2013 compared to the nine months ended June 30, 2012
+ 
+
+ Revenues
+ 
+
+ We earned revenues of $121,640 during the nine months ending on June 30, 2013, compared to revenues of $nil during the same period in 2012. At this time, our ability to generate any significant revenues continues to be uncertain.
+ 
+
+ Net Loss
+ 
+
+ We incurred a net loss of $828,765 for the nine months ended June 30, 2013, compared to a net loss of $242,477 for the same period in 2012. This increase in net loss is due to our increased operations in 2013. Our basic and diluted loss per share was ($0.00) for the nine months ended June 30, 2013, and ($0.00) for the same period in 2012. 
+ Expenses
+ 
+
+ Our total operating expenses increased from $243,434 to $892,898 for the nine months ended June 30, 2013 compared to the same period in 2012. This increase in expenses is due to higher operating expenses.
+ 
+
+ Our professional fees, consisting primarily of legal, accounting and auditing fees, increased by $245,102 to $399,289 for the nine months ended June 30, 2013 from $154,187 for the same period in 2012, mainly due to increased legal and auditing services provided in the nine month period ended June 30, 2013. 
+ 
+
+ Our rent expenses increased from $18,166 to $42,021 for the nine months ended June 30, 2013 compared to the same period in 2012. 
+ 
+ The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.
+
+ 56 
+ 
+ Changes In and Disagreements with Accountants
+ We have had no changes in or disagreements with our accountants. 
+ Available Information 
+ We have filed a registration statement on Form S-1 under the Securities Act of 1933 with the Securities and Exchange Commission with respect to the shares of our common stock offered through this prospectus. This prospectus is filed as a part of that registration statement, but does not contain all of the information contained in the registration statement and exhibits. Statements made in the registration statement are summaries of the material terms of the referenced contracts, agreements or documents of the company. We refer you to our registration statement and each exhibit attached to it for a more detailed description of matters involving the company, and the statements we have made in this prospectus are qualified in their entirety by reference to these additional materials. You may inspect the registration statement, exhibits and schedules filed with the Securities and Exchange Commission at the Commission's principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the Public Reference Section of the Securities and Exchange Commission, 100 F Street NE, Washington, D.C. 20549. D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms.
+ The Securities and Exchange Commission also maintains a web site at http://www.sec.gov that contains reports, proxy statements and information regarding registrants that file electronically with the Commission. Our registration statement and the referenced exhibits can also be found on this site. 
+ 
+
+ Directors, Executive Officers, Promoters and Control Persons
+ 
+
+ Our executive officer and directors and their ages as of the date of this prospectus is as follows:
+ 
+
+ Director:
+ 
+ Name of Director Age
+ 
+ Yi Lung Lin 61
+ 
+ 
+ Executive Officer:
+ 
+ Name of Officer Age Office_____________________
+ 
+ Yi Lung Lin 61 President, Chief Executive Officer, Secretary,
+ Treasurer, Chief Financial Officer
+ 
+ Pei Wei Jiang 35 Principal Accounting Officer
+ 
+ 
+ 
+
+ 57 
+ 
+
+ Biographical information 
+ 
+
+ Set forth below is a brief description of the background and business experience of our officers and our directors for the past five years.
+ 
+
+ Yi Lung Lin, Director and President, Chief Executive Officer, Secretary, Treasurer, Chief Financial Officer
+ 
+
+ Since our inception on July 22, 2010, Yi Lung Lin has been our president, chief executive officer, secretary, chief financial officer and a member of the board of directors. Mr. Lin is a Chartered Marketer (UK), Chartered Manager (UK), Accountant (UK) and a merchant banker by profession. He is also a Paralegal Advisor after he obtained the Bachelor of Law (LLB (Hons)) degree from the Nottingham Law School (Nottingham Trent University, UK). After his professional studies, he has been employed by international organizations like SKF and Nestle as their accountant and then ventured into the financial services businesses for more than 10 years. In 1994, he became the duly appointed Trade Commissioner for the Republic of Vanuatu to head the Vanuatu Trade Office in New Zealand and then, to be responsible for the Vanuatu Trade Office in Taiwan. Prior to his retirement as the Vanuatu Trade Commissioner, he has been appointed by the President of the Sanma Province, Vanuatu as the Ambassador. At present, he is the chairman and Managing Director of Access Finance and Securities (NZ) Limited ( AFS ), a financial institution duly incorporated under the laws of New Zealand providing offshore merchant banking/investment banking services in the area associated and/or incidental to capital markets assisting companies to go public in the US for listing on the OTCBB or the Pink Sheet, merger and acquisition, securities placement agent service and underwriting securities. He is also the Managing Director of other companies under the AFS Group of Companies, namely, Access Equity Capital Management Corp, USA and Access Management Consulting and Marketing Pte Ltd, Singapore as well as the President and CEO of the NATfresh Beverages Corp and Managing Director of NATfresh Productions (S) Pte Ltd and Genufood Enzyme (S) Pte Ltd, Singapore. 
+ 
+
+ Pei Wei Jiang, Principal Accounting Officer
+ 
+
+ On June 7, 2013, Pei Wei Jiang had been appointed to be our Principal Accounting Officer to assist the President of the Company. Ms. Jiang is an Economist by profession. She is a graduate from the Shanghai University of Finance and Economics, China. She is also a student member of the Association of Chartered Certified Accountants, UK (ACCA) where she had just sat her final paper completing the ACCA course. After her education, she was employed by Shanghai Long Xing Property Development Co Ltd, China where she worked as an Accounts Executive for 3 years. She then migrated to Singapore in 2005 and is currently a Singapore Permanent Resident. In Singapore, she was employed by Chambers property Management Services Pte Ltd as an Accounts Executive for a year to take on another employment with Leisurequest Pte Ltd where she worked for 4 years as an Accounts Executive. She then joined Trio-Tech International Pte Ltd as an Accounts Executive for one year. In August, 2012, she joined the AFS Group, namely, Access Management Consulting and Marketing Pte Ltd and continued to be employed by the AFS Group as Accounting Manager. 
+ 
+
+ Independent Directors
+ 
+
+ The rules of the SEC require that we, because we are not listed on any national securities exchange, choose a definition of director independence for purposes of determining which directors are independent. We have chosen to follow the definition of independence as determined by the Marketplace rules of the Nasdaq national market ( NASDAQ ). Pursuant to NASDAQ s definition, we do not have any independent directors.
+ 
+ Term of Office
+ 
+
+ Our officers and our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. 
+ 
+
+ Significant Employees
+ 
+
+ There are no persons other than our officers and directors above that are expected by us to make a significant contribution to our business.
+ 
+ 58 
+ 
+
+ Executive Compensation 
+ Summary Compensation Table 
+ The table below summarizes all compensation awarded to, earned by or paid to our executive officer by any person for all services rendered in all capacities to us for the fiscal period from our inception on June 21, 2010 to September 30, 2012 (our fiscal year-end).
+
+ SUMMARY COMPENSATION TABLE 
+
+ 
+
+ 
+
+ 
+
+ Name and Principal Position
+ 
+
+ 
+
+ Year
+ 
+
+Salary
+ ($)
+ 
+
+ 
+
+ Bonus
+($)
+ 
+
+ 
+
+ StockAwards($)(1)
+ 
+
+ 
+
+ OptionAwards($)(1)
+ 
+
+ 
+
+ Non-Equity Incentive Plan Compensation 
+($)
+ 
+
+ 
+
+ Change in PensionValue and Nonqualified Deferred Compensation Earnings
+($)
+ 
+
+ 
+
+ All Other Compens-ation
+($)
+ 
+
+ 
+
+ Total($)
+
+ Yi Lung Lin, President, CEO, Secretary, Treasurer, CFO, Principal Accounting Officer and Director
+ 2013
+ 
+
+ 
+
+ $5,000
+ 
+
+ 
+
+ None
+ 
+
+ 
+
+ None
+ 
+
+ 
+
+ None
+ 
+
+ 
+
+ None
+ 
+
+ 
+
+ None
+ 
+
+ 
+
+ None
+ 
+
+ 
+
+ None
+ 
+
+ 
+
+ 
+
+ 2012
+ $5,000
+ None
+ None
+ None
+ None
+ None
+ None
+ None
+
+ Pei Wei Jiang, Principal Accounting Officer
+ 2013
+ 
+
+ 
+
+ None
+ 
+
+ None
+ None
+ None
+ None
+ None
+ None
+ None
+
+ 
+
+ 2012
+ None
+ None
+ None
+ None
+ None
+ None
+ None
+ None
+ 
+
+ 
+
+ Chen Wen Hsu, former Director
+ 2013
+ 
+
+ 
+
+ None
+ 
+
+ 
+
+ 
+
+ None
+ 
+
+ 
+
+ 
+
+ None
+ 
+
+ 
+
+ 
+
+ None
+ 
+
+ 
+
+ 
+
+ None
+ 
+
+ 
+
+ 
+
+ None
+ 
+
+ 
+
+ 
+
+ None 
+ None
+ 
+
+ 
+
+ 
+
+ 
+
+ 2012
+ None
+ None
+ None
+ None
+ None
+ None
+ None
+ None
+
+ 
+
+ Stock Option Grants 
+
+ We have not granted any stock options to the executive officers since our inception. 
+
+Employment Agreements 
+ 
+We do not have any employment agreements.
+ 59 
+ 
+ 
+
+ Security Ownership of Certain Beneficial Owners and Management
+ The following tables set forth the ownership, as of the date of this Prospectus, of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, our directors, and our executive officers and directors as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in control. 
+ The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown. The mailing address for all persons is Two Allen Center, 1200 Smith Street, Suite 1600, Houston, Texas 77002, United States of America. 
+ 
+
+ Shareholders
+ Number of Shares 
+ Percentage
+ 
+
+ Yi Lung Lin (1)
+ 153,983,108
+ 39.1%
+ 
+
+ Pei Wei Jang
+ 0
+ 0%
+ 
+
+ All directors and executive officers as a group [2 persons]
+ 181,000,000
+ 39.1%
+ 
+
+ Chen-Wen Hsu (2)
+ 74,385,013
+ 18.9%
+ 
+
+ Huei-Ling Wang (3)
+ 38,625,000
+ 9.8%
+ 
+
+ I-Jen Chen (4)
+ 20,010,000
+ 5.1%
+ 
+
+ Yi-Chou Chen (4)
+ 20,010,000
+ 5.1%
+ 
+
+ (1)
+ Yi Lung Lin is our President. Mr. Lin s beneficial ownership includes 53,983,108 shares held by Access Equity Capital Management Corp. and 100,000,000 shares held by Access Finance and Securities (NZ) Limited, both companies which Mr. Lin has voting and investment control over.
+ (2)
+ Chen Wen Hsu is a former director. Mr. Hsu s beneficial ownership includes 8,847,200 shares held in his own name and 65,537,813 shares held by Taiwan Cell Energy Enzymes Corp., a company Mr. Hus has voting and investment control over.
+ (3)
+ Huei-Ling Wang is the wife of our President Yi Lung Lin.
+ (4)
+ Former directors.
+
+ This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based upon 394,245,972 shares of common stock outstanding as of October 31, 2013. 
+ 
+ 60 
+ 
+
+ Certain Relationships and Related Transactions
+ 
+
+ On August 9, 2010, we sold 20,000 shares of common stock at $0.25 a share to our directors for total consideration of $5,000.
+ 
+
+ Our CEO is the managing director of a consulting company, who provides consulting services to us. In January 2011, we converted $50,000 owed to this consulting company into 50,000,000 shares of our common stock at the price of $0.001 per share. The $50,000 was recorded as an offering cost when owed due to the cost being directly related to the stock offering. We issued this consulting company an additional 150,000,000 shares valued at $150,000 also recorded as offering costs. From inception through September 30, 2011, we issued the aforementioned 200,000,000 shares recorded at $200,000 and paid total cash of $345,000 for offering costs. We also paid a total $100,000 for consulting services to this company during the year ended September 30, 2011 which was expensed as professional fees.
+ 
+
+ During the year ended September 30, 2011, our President, Chief Executive Officer, Chief Financial Officer, and director, Mr. Yi Lung Lin paid some operating expenses on our behalf. The amounts due to him for these expenses were $1,250 and $0 as of March 31, 2013 and September 30, 2012, respectively. 
+ 
+ During the twelve months ended September 30, 2012, we paid one of the directors of GEECIS $11,550 for IT consulting services. 
+ 
+
+ During the twelve months ended September 30, 2012, we reimbursed one of the directors of GEECIS $8,076 for rent and utilities in Sri Lanka.
+ 
+
+ On September 21, 2010, we entered into a Sole Marketing Agent Agreement with Access Management Consulting and Marketing Pte. Ltd. ( Access Management Consulting ) for the marketing of our range of enzyme products and to source, select and interview country sole distributors for the distribution of our range of enzyme products to the world at large. Our President, Chief Executive Officer, Chief Financial Officer, and director, Mr. Yi Lung Lin, is also the President and Managing Director of Access Management Consulting.
+ 
+
+ On October 11, 2010, we entered into a Sole Distributorship Agreement (General Outlet-Human Consumption) with Taiwan Cell Energy Enzymes Corporation ( TCEEC ) for marketing and distribution of our enzyme products in the Republic of China (Taiwan). Mr. Chen Wen Hsu, one of our former directors, has voting and investment control over TCEEC. As was provided for under the Sole Distributorship Agreement, during the year ended September 30, 2011, TCEEC had invested in us by subscribing to 125,000,000 shares of our common stock at a price of $0.008 per share, for total proceeds of $1 million. The value of the shares issued was evaluated and found to be worth more than the cash received at a total value of $1,274,705. The difference of $274,705 represented compensation to the distributor. 
+ 
+
+ During the year ended September 30, 2012 and September 30, 2011, we recognized $60,993 and $120,558, respectively, in related party revenue from our customer TCEEC who is controlled by one of our former directors Ken Wen Hsu.
+ 
+
+ During the nine months ended June 30, 2013 and June 30, 2012, the Company recognized $1,653 and $0, respectively, in related party revenue from Yi Lung Lin who is the President of the Company and Access Management Consulting and Marketing Pte Ltd (AMCM) where Yi Lung Lin is the Managing Director of AMCM.
+ 
+
+ During the twelve months ended September 30, 2012, we collected $279,705 of contribution receivable of capital from our customer TCEEC who is controlled by our former director Ken Wen Hsu.
+ 
+
+ During the year ended September 30, 2012, we received a total of $850,000 from TCEEC for 2,833,333 shares issued to them during the year then ended. TCEEC owed an additional $2,111,300 to us as of September 30, 2012 for 7,037,667 shares issued during the year then ended.
+ 
+
+ During the year ended September 30, 2012, we received a total of $9,000 from Access Equity Capital Management, a company controlled by Mr. Yi Lung Lin, in consideration of 30,000 shares issued to them. 
+ 
+
+ On February 15, 2012 the Board approved the appointment of Access Management Consulting and Marketing Pte Ltd ( AMCM ) to provide bookkeeping services in replacement of Albeck Financial Services. Our President is also the Managing Director of AMCM.
+ 
+
+ On September 6, 2012, the Board approved a monthly salary of $5,000 to our President, Yi Lung Lin commencing September 1, 2012.
+ 
+ 61 
+ 
+
+ 
+On September 21, 2012, the Board approved the engagement of Millar & Smith PLLC as the immigration lawyer to provide immigration legal service and to apply L-1 visa for our President, YI Lung Lin and L-2 visa for his wife, Wang Huei Ling.
+ 
+
+ On September 24, 2012, NATfresh Beverages has purchased US $500,000 worth of IPO GEEC shares from us. Mr. Yi Lung Lin is the President, CEO, CFO, Treasure, Secretary and Principal Accounting Officer of NATfresh Beverages Corp.
+ 
+
+ On February 27, 2013, the Promissory Note Agreement entered between us and TCEEC was cancelled since TCEEC could not honor its obligations. 
+ 
+
+ During the nine months ended June 30, 2013 the Company paid $37,122 to Access Finance and Securities (NZ) Limited as offering costs. 
+ 
+
+ On March 15, 2013, we filed a claim against TCEEC in the United States District Court, District of Nevada for breach of contract pursuant to Clause 13 of the Sole Distributorship Agreement. Total number of the shares at the time of default was 75,000,000. According to our most recent Form S-1/A filing with the United States Securities and Exchange Commission, filed on March 9, 2012, the last subscription agreement we signed was at a price of $0.25 per share. At this revised price per share, factoring in: (i) payments actually made, (ii) the fair market value of the remainder of the distribution agreement, and (iii) other costs, the claim is for $17,875,465. 
+ 
+
+ On April 5, 2013, we applied to the Nevada Court for an Order (Injunction) to restrain TCEEC from transferring their shares. The court has allowed for the injunction and set April 18, 2013 for hearing.
+ 
+
+ As of June 30, 2013, and as of September 30, 2012 there were amounts due to related parties of $70,173 and $74,467 respectively.
+ 
+
+ During the nine months ended June 30, 2013, we received a total of $155,000 from TCEEC, $270,368 from an existing shareholder and $200,000 from a related party, respectively for the subscription receivable. 
+ 
+
+ During the nine months ended June 30, 2013, we generated $1,653 in revenue on sales to related parties.
+ 
+
+ Other than as described above, we have not entered into any transactions with our officers, directors, persons nominated for these positions, beneficial owners of 5% or more of our common stock, or family members of these persons wherein the amount involved in the transaction or a series of similar transactions exceeded the lesser of $120,000 or 1% of our total assets for the last fiscal year.
+
+ Director Independence
+
+ The OTC Bulletin Board on which our common shares are listed on does not have any director independence requirements. We also do not have a definition of independence as our directors also hold positions executive officer positions with us. Once we engage further directors and officers, we plan to develop a definition of independence and scrutinize our Board of Directors with regards to this definition.
+ We do not have a formal written policy for review and approval of transactions required to be disclosed pursuant to Item 404(a) of Regulation S-K. Our board members are responsible for review, approval and ratification of related-person transactions between us and any related person. Under SEC rules, a related person is an officer, director, nominee for director or beneficial holder of more than 5% of any class of our voting securities since the beginning of the last fiscal year or an immediate family member of any of the foregoing. 
+ Disclosure of Commission Position of Indemnification forSecurities Act Liabilities 
+
+ Our sole officer and our directors are indemnified as provided by the Nevada Revised Statutes and our Bylaws. We have been advised that in the opinion of the Securities and Exchange Commission indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to court of appropriate jurisdiction. We will then be governed by the court's decision. 
+ 
+ 62 
+ 
+ 
+ Financial Statements 
+ 
+ INDEX TO FINANCIAL STATEMENTS
+ 
+ 
+ Report of Independent Registered Public Accounting Firm
+ 
+ F-1
+
+ 
+ 
+ 
+
+ Consolidated Balance Sheets as of September 30, 2012 and 2011
+ 
+ F-2
+
+ 
+ 
+ 
+
+ Consolidated Statements of Operations for the years ended September 30, 2012 and 2011, and for the period from June 21, 2010 (Date of Inception) to September 30, 2012 
+ 
+ F-3
+
+ 
+ 
+ 
+
+ Consolidated Statements of Stockholders Equity (Deficit) for the period from June 21, 2010 (Date of Inception) to September 30, 2012
+ 
+ F-4 
+
+ 
+ 
+ 
+
+ Consolidated Statements of Cash Flows for the years ended September 30, 2012 and 2011, and for the period from June 21, 2010 (Date of Inception) to September 30, 2012
+ 
+ F-5
+
+ 
+ 
+ 
+
+ Notes to Consolidated Financial Statements
+ 
+ F-6
+
+ 
+
+ 
+ 63 
+ 
+
+ 
+
+ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
+ 
+ 
+
+ To the Board of Directors
+ Genufood Energy Enzymes Corp.
+ (A Development Stage Company)
+ 
+ We have audited the accompanying balance sheets of Genufood Energy Enzymes Corp. (a development stage company) as of September 30, 2012 and 2011, and the related statements of operations, changes in stockholders' deficit, and cash flows for the year and period then ended and for the period from inception (June 21, 2010) through September 30, 2012. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
+ 
+ We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
+ 
+ In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Genufood Energy Enzymes Corp. as of September 30, 2012 and 2011, and the results of its operations, changes in stockholders' deficit and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America.
+ 
+ The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company had a cumulative net loss from operations of $504,381 as of September 30, 2012 and expects to incur additional losses in the near future. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
+ 
+ 
+
+ /s/ M&K CPAS, PLLC 
+ www.mkacpas.com
+ Houston, Texas
+ January 9, 2013
+
+ F-1 
+ 
+ 
+ 
+ GENUFOOD ENERGY ENZYMES CORP
+
+ (A Development Stage Company)
+
+ CONSOLIDATED BALANCE SHEETS
+
+ 
+
+ 
+ 
+ September 30, 2012
+ 
+ 
+ September 30, 2011
+
+ ASSETS
+ 
+ 
+ 
+ 
+ 
+
+ Current assets
+ 
+ 
+ 
+ 
+ 
+
+ Cash
+ $
+ 1,166,927
+ 
+ $
+ 543,764
+
+ Prepaid expenses
+ 
+ 804
+ 
+ 
+ 24,680
+
+ Tax receivable
+ 
+ 10,764
+ 
+ 
+ -
+
+ Other receivable
+ 
+ 142
+ 
+ 
+ -
+
+ Other receivable related party
+ 
+ 393
+ 
+ 
+ -
+
+ Inventory
+ 
+ 93,742
+ 
+ 
+ 2,681
+
+ Total current assets
+ 
+ 1,272,772
+ 
+ 
+ 571,125
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Computer equipment and software, net of accumulated depreciation
+ 
+ 5,476
+ 
+ 
+ 2,386
+
+ Intangibles and other assets
+ 
+ 
+ 
+ 
+ 
+
+ Trademarks, net of accumulated amortization
+ 
+ 28,524
+ 
+ 
+ 25,821
+
+ Security deposit asset
+ 
+ 34,721
+ 
+ 
+ -
+
+ Total intangibles and other assets
+ 
+ 63,245
+ 
+ 
+ 25,821
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total assets
+ $
+ 1,341,493
+ 
+ $
+ 599,332
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ LIABILITIES AND STOCKHOLDERS' EQUITY
+ 
+ 
+ 
+ 
+ 
+
+ Current liabilities
+ 
+ 
+ 
+ 
+ 
+
+ Accounts payable
+ $
+ 16,180
+ 
+ $
+ 18,672
+
+ Accounts payable to related party
+ 
+ 74,467
+ 
+ 
+ 3,169
+
+ Accrued expenses
+ 
+ 49,739
+ 
+ 
+ 1,001
+
+ Customer deposit
+ 
+ -
+ 
+ 
+ 60,600
+
+ Total current liabilities
+ 
+ 140,386
+ 
+ 
+ 83,442
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total liabilities
+ 
+ 140,386
+ 
+ 
+ 83,442
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Stockholders' equity
+ 
+ 
+ 
+ 
+ 
+
+ Common Stock, $0.001 par, 500,000,000 shares authorized. 393,308,472 shares issued and outstanding at September 30, 2012 and 383,308,472 at September 30, 2011 
+ 
+ 393,308
+ 
+ 
+ 383,308
+
+ Additional paid in capital
+ 
+ 3,891,010
+ 
+ 
+ 661,297
+
+ Subscription receivable
+ 
+ (2,111,300)
+ 
+ 
+ -
+
+ Deficit accumulated during development stage
+ 
+ (971,082)
+ 
+ 
+ (528,327)
+
+ Accumulated other comprehensive income
+ 
+ (829)
+ 
+ 
+ (388)
+
+ Total stockholders' equity
+ 
+ 1,201,107
+ 
+ 
+ 515,890
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total liabilities and stockholders' deficit
+ $
+ 1,341,493
+ 
+ $
+ 599,332
+
+ The accompanying notes are an integral part of these consolidated financial statements
+
+ F-2 
+ 
+
+ GENUFOOD ENERGY ENZYMES CORP
+
+ (A Development Stage Company)
+
+ CONSOLIDATED STATEMENTS OF OPERATIONS
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+
+ 
+
+ 
+ 
+ 
+ 
+
+ 
+
+ Twelve Months Ended September 30, 2012
+ Twelve Months Ended September 30, 2011
+ June 21, 2010 (Inception) through September 30, 2012
+
+ Revenue
+ 
+ 
+ 
+ 
+ 
+
+ Related party revenue
+ 
+ 
+ $ 60,993
+ $ 120,558 
+ 181,551
+
+ Total revenue
+ 
+ 
+ -
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Cost of goods sold
+ 
+ 
+ 
+ 
+ 
+
+ Product costs
+ 
+ 
+ 33,750
+ 66,966
+ 100,716
+
+ Label costs
+ 
+ 
+ 9,418
+ 2,589
+ 12,007
+
+ Total cost of goods sold
+ 
+ 
+ 43,168
+ 69,555
+ 112,723
+
+ Gross margin
+ 
+ 
+ 17,825
+ 51,003
+ 68,828
+
+ Expenses
+ 
+ 
+ 
+ 
+ 
+
+ Sales commission expenses
+ 
+ 
+ 28,117
+ 24,112
+ 52,229
+
+ Compensation to distributors
+ 
+ 
+ -
+ 274,705
+ 274,705
+
+ Product label design
+ 
+ 
+ 8,818
+ 4,290
+ 13,108
+
+ Advertising & business promotion
+ 
+ 
+ 29,041
+ 4,331
+ 33,372
+
+ Website design
+ 
+ 
+ 15,962
+ 10,950
+ 26,912
+
+ Bank service charge
+ 
+ 
+ 2,879
+ 2,618
+ 5,627
+
+ Computer and internet expenses
+ 
+ 
+ 659
+ -
+ 810
+
+ Filing fees
+ 
+ 
+ 7,639
+ 5,156
+ 13,633
+
+ License and permits
+ 
+ 
+ 1,410
+ 633
+ 4,988
+
+ Meals and entertainment
+ 
+ 
+ 5,067
+ 338
+ 5,966
+
+ Office supplies
+ 
+ 
+ 1,164
+ 663
+ 1,858
+
+ Rent expense
+ 
+ 
+ 39,810
+ 6,631
+ 47,232
+
+ Transfer agent fees
+ 
+ 
+ 3,793
+ 6,023
+ 19,816
+
+ Travel expense
+ 
+ 
+ 30,919
+ 17,344
+ 48,263
+
+ Professional fees
+ 
+ 
+ 240,858
+ 189,397
+ 438,755
+
+ Postage & shipping
+ 
+ 
+ 354
+ 439
+ 793
+
+ Telephone expense
+ 
+ 
+ 1,108
+ 765
+ 1,873
+
+ AGM & board meeting expenses
+ 
+ 
+ 17,072
+ 7,243
+ 24,315
+
+ Depreciation expense
+ 
+ 
+ 886
+ 318
+ 1,204
+
+ Amortization expense
+ 
+ 
+ 2659
+ -
+ 2,659
+
+ Payroll expenses
+ 
+ 
+ 23,084
+ -
+ 23,084
+
+ Medical expenses
+ 
+ 
+ 215
+ -
+ 215
+
+ Courses and seminars
+ 
+ 
+ 72
+ -
+ 72
+
+ Insurance expenses
+ 
+ 
+ 180
+ -
+ 180
+
+ Total operating expenses
+ 
+ 
+ 461,766
+ 555,956
+ 1,041,669
+
+ Total operating loss
+ 
+ 
+ (443,941)
+ (504,953)
+ (972,841) 
+
+ Other income
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Interest income
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 1,140
+ 572 
+ 1,713
+
+ Foreign Currency Exchange Gain/Loss
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 46
+ - 
+ 46
+
+ Net loss
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ (442,755)
+ (504,381) 
+ (971,082)
+
+ Foreign currency translation adjustment
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 441
+ (388) 
+ 86
+
+ Comprehensive loss
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ (442,314)
+ (504,769) 
+ (970,996)
+
+ Weighted average number of common shares outstanding-basic and diluted
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 387,862,762
+ 292,075,595 
+ 
+
+ Net loss per share-basic and diluted
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ (0.00)
+ (0.00) 
+ 
+
+ 
+ 
+ 
+
+ The accompanying notes are an integral part of these consolidated financial statements
+
+ F-3 
+ 
+
+ 
+
+ GENUFOOD ENERGY ENZYMES CORP
+
+ (A Development Stage Company)
+
+ CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+ 
+ Common stock
+ Additional paid in capital
+ Subscription Receivable
+ Deficit accumulated during the development
+ stage
+ Accumulated other comprehensive loss
+ Total
+
+ 
+
+ Shares 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Balance at June 21, 2010 (Inception)
+ -
+ $
+ -
+ $
+ -
+ $
+ - 
+ $
+ -
+ $
+ -
+ $
+ -
+
+ Common stock issued for cash
+ 308,472 
+ 
+ 308 
+ 
+ 46,692 
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ 47,000 
+
+ Common stock issued to founders for cash
+ 58,000,000 
+ 
+ 58,000 
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ 58,000 
+
+ Capital contribution by shareholders
+ -
+ 
+ -
+ 
+ 4,500 
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ 4,500 
+
+ Common stock issued for offering costs
+ 13,500,000 
+ 
+ 150,000 
+ 
+ (150,000)
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ - 
+
+ Cash paid for offering costs
+ -
+ 
+ - 
+ 
+ (100,000)
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ (100,000) 
+
+ Cash owed for offering costs ($200,000 paid in cash and $50,000 converted into shares in fiscal 2011)
+ -
+ 
+ - 
+ 
+ (250,000)
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ (250,000)
+
+ Net loss
+ - 
+ 
+ - 
+ 
+ - 
+ 
+ -
+ 
+ (23,946)
+ 
+ -
+ 
+ (23,946) 
+
+ Balance at September 30, 2010
+ 208,308,472
+ $
+ 208,308
+ $
+ (448,808)
+ $
+ -
+ $
+ (23,946)
+ $
+ -
+ $
+ (264,446)
+
+ Common stock issued for cash-
+ 125,000,000
+ 
+ 125,000
+ 
+ 875,000
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ 1,000,000
+
+ Capital contribution by shareholders
+ -
+ 
+ -
+ 
+ 5,400
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ 5,400
+
+ Cash paid for offering costs
+ -
+ 
+ -
+ 
+ (45,000)
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ (45,000)
+
+ Convertible accounts payable owed to related party converted into common shares
+ 3,500,000
+ 
+ 50,000
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ 50,000
+
+ Foreign currency translation adjustment
+ -
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ (388)
+ 
+ (388)
+
+ Stock compensation to distributors
+ -
+ 
+ -
+ 
+ 274,705
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ 274,705
+
+ Net loss
+ -
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ (504,381)
+ 
+ -
+ 
+ (504,381)
+
+ Balance at September 30, 2011
+ 383,308,472
+ $
+ 383,308
+ $
+ 661,297
+ $
+ -
+ $
+ (528,327)
+ $
+ (388)
+ $
+ 515,890
+
+ Common stock issued for cash-
+ 10,000,000
+ 
+ 10,000
+ 
+ 2,990,000
+ 
+ (2,111,300)
+ 
+ -
+ 
+ -
+ 
+ 888,700
+
+ Collection of contribution from shareholders
+ -
+ 
+ -
+ 
+ 279,705
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ 279,705
+
+ Cash owed for offering costs
+ -
+ 
+ -
+ 
+ (39,992)
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ (39,992)
+
+ Net loss
+ -
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ (442,755)
+ 
+ -
+ 
+ (442,755)
+
+ Foreign currency translation adjustment
+ -
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ -
+ 
+ (441)
+ 
+ (441)
+
+ Balance at September 30, 2012
+ 393,308,472
+ $
+ 393,308
+ $
+ 3,891,010
+ $
+ (2,111,300)
+ $
+ (971,082)
+ $
+ (829)
+ $
+ 1,201,107
+
+ 
+ 
+ 
+
+ The accompanying notes are an integral part of these consolidated financial statements
+ 
+ F-4 
+ 
+ 
+ GENUFOOD ENERGY ENZYMES CORP
+ (Development Stage Company)
+ CONSOLIDATED STATEMENTS OF CASH FLOWS
+
+ 
+ 
+ 
+ Twelve Months Ended September 30, 2012
+ 
+ Twelve Months Ended September 30, 2011
+ 
+ From June 21, 2010 (Inception) through September 30, 2012
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ CASH FLOWS FROM OPERATING ACTIVITIES
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net loss
+ $
+ (442,755)
+ $
+ (504,381)
+ $
+ (971,082)
+
+ Adjustments to reconcile net loss to net cash:
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Depreciation
+ 
+ 886
+ 
+ 318
+ 
+ 1,204
+
+ Amortization - trademarks
+ 
+ 2,659
+ 
+ -
+ 
+ 2,659
+
+ Stock compensation to distributors
+ 
+ -
+ 
+ 274,705
+ 
+ 274,705
+
+ Change in operating assets and liabilities:
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Prepaid expenses
+ 
+ 18,964
+ 
+ (18,242)
+ 
+ (5,716)
+
+ Inventory
+ 
+ (82,999)
+ 
+ (2,681)
+ 
+ (85,680)
+
+ Other receivables
+ 
+ (142)
+ 
+ -
+ 
+ (142)
+
+ Other receivables Related Party
+ 
+ (393)
+ 
+ -
+ 
+ (393)
+
+ Other assets
+ 
+ (44,493)
+ 
+ -
+ 
+ (44,493)
+
+ Accounts payable
+ 
+ (2,492)
+ 
+ 14,905
+ 
+ 16,180
+
+ Accounts payable to related party
+ 
+ 70,634
+ 
+ (331)
+ 
+ 73,803
+
+ Accrued expenses
+ 
+ 9,001
+ 
+ 1,001
+ 
+ 10,002
+
+ Customer deposits
+ 
+ (60,600)
+ 
+ 60,600
+ 
+ -
+
+ Net cash used in operating activities
+ 
+ (531,730)
+ 
+ (174,106)
+ 
+ (728,953)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ CASH FLOWS FROM INVESTING ACTIVITIES
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Purchase of computer equipment & software 
+ 
+ (4,039)
+ 
+ (2,704)
+ 
+ (6,743)
+
+ Cash paid for trademark registration
+ 
+ (5,362)
+ 
+ (25,821)
+ 
+ (31,183)
+
+ Net cash used in investing activities
+ 
+ (9,401)
+ 
+ (28,525)
+ 
+ (37,926)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ CASH FLOWS FROM FINANCING ACTIVITIES
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Proceeds from sale of common shares
+ 
+ 888,700
+ 
+ 1,000,000
+ 
+ 1,935,700
+
+ Proceeds from sale of common shares to founders
+ 
+ -
+ 
+ -
+ 
+ 58,000
+
+ Cash paid for offering costs
+ 
+ -
+ 
+ (245,000)
+ 
+ (345,000)
+
+ Capital contribution by shareholders
+ 
+ 279,705
+ 
+ 5,400
+ 
+ 289,605
+
+ Advances to related party, net
+ 
+ -
+ 
+ (52,294)
+ 
+ -
+
+ Net cash provided by financing activities
+ 
+ 1,168,405
+ 
+ 708,106
+ 
+ 1,938,305
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Effect of exchange rate changes on cash and cash equivalents
+ 
+ (4,111)
+ 
+ (388)
+ 
+ (4,499)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ NET INCREASE (DECREASE) IN CASH
+ 
+ 623,163
+ 
+ 505,087
+ 
+ 1,166,927
+
+ CASH AT THE BEGINNING PERIOD
+ 
+ 543,764
+ 
+ 38,677
+ 
+ -
+
+ CASH AT THE END OF THE PERIOD
+ $
+ 1,166,927
+ $
+ 543,764
+ $
+ 1,166,927
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Supplemental disclosure of cash flow information
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Non-cash financing activities:
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Cash owed for offering costs to related party 
+ $
+ 39,992
+ $
+ -
+ $
+ 289,992
+
+ Shares issued for offering costs
+ $
+ -
+ $
+ -
+ $
+ 150,000
+
+ Convertible accounts payable owed to related party converted to shares
+ $
+ -
+ $
+ 50,000
+ $
+ 50,000
+
+ Issuance of stock payable
+ $
+ -
+ $
+ 600,000
+ $
+ 600,000
+
+ Subscription receivable
+ $
+ 2,111,300
+ $
+ -
+ $
+ 2,111,300
+
+ 
+ 
+ 
+
+ The accompanying notes are an integral part of these consolidated financial statements
+ 
+ F-5 
+ 
+
+ 
+
+ GENUFOOD ENERGY ENZYMES CORP
+ (A Development Stage Company)
+ Notes to Consolidated Financial Statements
+ 
+
+ 
+
+ NOTE 1- BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
+ 
+ Organization and Business Operations
+ 
+ GenuFood Energy Enzymes Corp., USA (the Company or GEEC ) was incorporated under the laws of the State of Nevada on June 21, 2010. GEEC is a start-up company and its main focus is to promote market, distribute and export a range of enzyme products for human and animal consumption manufactured in the Unites States for the Asian and ASEAN markets. The Company is the owner of the following trademarks, ProCellax and ProAnilax. These trademarks and GEEC as a trademark have been filed with the United States Patent and Trademark Office and registered with China (PRC), Hong Kong, Macau, Taiwan and Singapore. Similarly, these trademarks have been filed with the jurisdictions of Thailand, Malaysia, and Sri Lanka. 
+ 
+ The Company s objective is to commence marketing and distribution of American range of enzyme products for human and animal consumption to sole country distributors, wholesalers, dealers and retailers, as well as to the general public following the Company s Multi-Level Marketing Franchise Investor Dealer Related (MLM-FIDR) concept, to begin with, in Taiwan, and then to China, Hong Kong, Macau, Thailand, Malaysia, Singapore and Sri Lanka.
+ 
+
+ On May 24, 2011, GEEC Internet Sales (Private) Limited ( GEECIS ), a wholly owned subsidiary of GEEC, was established in the Democratic Socialist Republic of Sri Lanka. GEECIS is established initially to be responsible for GEEC s internet sales worldwide, but recently its role has been changed to that of a Sole Country Distributor.
+ 
+
+ On February 13, 2012 the Company invested and incorporated a wholly owned subsidiary company, GEEC Enzymes (S) Pte Ltd (GESPL) in Singapore with a view to be the Sole Country Distributor for ProCellax and ProAnilax in Singapore. GESPL has started initial test marketing for the range of ProCellax enzymes products.
+ 
+
+ The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.
+ The Company is in its development stage with no significant revenues. The Company s initial operations include organization, capital formation, target markets identification and developing marketing plans. 
+ 
+ The Company s fiscal year end is September 30.
+ 
+ NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
+ 
+ Basis of Presentation
+ 
+ The Company s audited consolidated financial statements included herein have been prepared in accordance with US GAAP and pursuant to the rules of the SEC. The Company believes that the presentations and disclosures herein are adequate for a fair presentation. 
+ 
+ Development Stage Activities
+ 
+ The accompanying consolidated financial statements have been prepared in accordance with ASC 915-10-05, Development Stage Entities. A development - stage company is one in which planned principal operations have not commenced or, if its operations have commenced, but there have been no significant revenues.
+ Use of Estimates
+ 
+ The preparation of the audited consolidated financial statements in conformity with generally accepted accounting principles in the United States of America ( US GAAP ) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the audited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 
+ 
+
+ F-6 
+ 
+
+ Revenue Recognition
+ 
+ Our revenues are generated from sales of enzyme products under our private label.
+ 
+ For sales of enzyme products under our private label the Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and reduces it for the amount of estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the products have been shipped to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
+
+ Foreign Currency Translation and Transactions
+ 
+ The reporting and functional currency of GEEC is the United States Dollar ( U.S. dollar ). The functional currency of GEECIS, a wholly owned subsidiary of GEEC, is the Sri Lanka Rupee ( LKR ). The functional currency of GESPL, a wholly owned subsidiary of GEEC, is the Singapore Dollar ( SGD ).
+ 
+ For financial reporting purposes, the financial statements of the Company s Sri Lanka subsidiary, which are prepared using the LKR, are translated into the Company s reporting currency, the U.S. dollar. Assets and liabilities are translated using the exchange rate on the balance sheet date, which was 0.0077 as of September 30, 2012 and 0.0091 as of September 30, 2011, respectively. Revenue and expenses are translated using average exchange rates prevailing during each reporting period. The average exchange rate of 0.0081 and 0.0091 was used to translate revenues and expenses for the year ended September 30, 2012 and September 30, 2011, respectively. Stockholders equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in stockholders equity.
+ 
+
+ For financial reporting purposes, the financial statements of the Company s Singapore subsidiary, which are prepared using the SGD, are translated into the Company s reporting currency, the U.S. dollar. Assets and liabilities are translated using the exchange rate on the balance sheet date, which was 0.8145 as of September 30, 2012. Revenue and expenses are translated using average exchange rates prevailing during each reporting period. The 0.7964 average exchange rate was used to translate revenues and expenses for the reporting period ended September 30, 2012. Stockholders equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in stockholders equity.
+ 
+ Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. The resulting exchange differences are included in the statements of operations.
+ 
+ No representation is made that the LKR or SGD amounts could have been, or could be converted into U.S. dollar at the above rates.
+ 
+ Cash and Cash Equivalents
+ 
+ The Company considers all highly liquid debt instruments with original maturities of three months or less when acquired to be cash equivalents. The Company places the majority of its cash and cash equivalents with financial institutions that are insured by the Federal Deposit Insurance Corporation ( FDIC ) up to $250,000. As of September 30, 2012, the Company had $1,166,927 cash in banks, $598,228 and $485,270 of which with two financial institutions, which is $583,498 in excess of FDIC limit. As of September 30, 2011, the Company had $543,764 cash in banks, $524,030 of which with one financial institution, which is $274,030 in excess of FDIC limit. The Company mitigates this concentration of credit risk by monitoring the credit worthiness of financial institutions and its customers. 
+ 
+ In October 2008, the Federal government temporarily increased the FDIC insured limits up to a maximum of $250,000 per depositor until January 1, 2014, after which time the insured limits will return to $100,000.
+ Cash and cash equivalents which are held in foreign banks were $83,429 and $2,905 as of September 30, 2012 and September 30, 2011, respectively. For Singapore s operation, the Company placed its cash and cash equivalents denominated in Singapore Dollars with financial institutions that are insured by the Singapore Deposit Insurance Corporation ( SDIC ) up to Singapore Dollar 50,000. For Sri Lanka s operation, the Company placed its cash and cash equivalents denominated in Sri Lanka Rupee with financial institutions that are insured by the Sri Lanka Deposit Insurance Scheme ( SLDIS ) up to Sri Lanka Rupee 200,000. As of September 30, 2012 and 2011, $23,850 and $2,905 was insured, respectively.
+ Beneficial Conversion Features
+ 
+From time to time, the Company may issue convertible debt that may have conversion prices that create an embedded beneficial conversion feature pursuant to the Emerging Issues Task Force guidance on beneficial conversion features. A beneficial conversion feature exists on the date a convertible liability is issued when the fair value of the underlying common stock to which the liability is convertible into is in excess of the face value of the liability. In accordance with this guidance, the intrinsic value of the beneficial conversion feature is recorded as a discount on the liability with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the term of the liability using the effective interest method. In cases where the liability relates to amounts owed for direct offering costs of an equity offering, the discount is charged to additional paid in capital with amortization.
+ 
+ Inventories
+ 
+The Company s inventories include enzyme products, packaging and labeling materials. Inventories are stated at the lower of cost or market value. Cost is determined using weighted average cost method. As of September 30, 2012 and September 30, 2011, the Company had inventory balances of $93,742 and $2,681, respectively, which was comprised solely of enzyme products, packaging and labeling materials. 
+ 
+ Intangible Assets
+ 
+The Company s intangible assets consist primarily of trademarks, which are carried at amortized cost. The company capitalizes filing and legal fees related to the trademark registration. All trademarks have legal lives from 7 to 10 years and are amortized over their respective legal lives upon approval (see Note 5-Trademarks).
+ 
+ The Company reviews its intangible assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. The Company assesses recoverability by reference to future cash flows from the products underlying these intangible assets. If these estimates change in the future, the Company may be required to record impairment charges for these assets. As of September 30, 2012 and September 30, 2011, no impairment indicators were prevalent.
+ 
+
+ F-7 
+ 
+Security Deposit Asset
+ 
+The security deposit is a refundable deposit, lodged with the Sampath Bank, for a facility to receive internet sales funds. In the event this facility was not obtained and instructions have been given to the Bank to refund the deposit. On April 17, 2012, the security deposit with Sampath Bank has been withdrawn and the fixed deposit account closed. 
+ During the year ended September 30, 2012, the Company paid a refundable security deposit of $1,652 to a consulting company. During the year ended September 30, 2012, GESPL paid a refundable security deposit of $20,851 for the lease of office premises. GESPL paid a security deposit of $12,218 for goods and services tax registration. 
+ Customer Deposit
+
+ The customer deposit represents money received by the Company in advance and will not be recognized as revenue until the products are shipped to customer. On September 22, 2012, the Company shipped the products to customer. As of September 30, 2012 and September 30, 2011, the Company recorded customer deposits of $0 and $60,600, respectively. 
+
+ 
+ Property, Plant and Equipment
+
+ Property, plant and equipment (PP&E) are stated at cost less accumulated depreciation. Gains or losses on disposals are recorded in the year of disposal. The cost of improvements that extend the life of property, plant, and equipment are capitalized. These capitalized costs may include structural improvements, equipment, and fixtures. All ordinary repair and maintenance costs are expensed as incurred.
+ 
+ The Company s PP&E as of September 30, 2012 and September 30, 2011 consisted of computer equipment and software with useful lives of five and three years, respectively. Depreciation is computed using the straight line method over the estimated useful lives. 
+ 
+Fair Value of Financial Instruments 
+
+FASB ASC Topic 825 Financial Instruments requires the Company to disclose, when reasonably attainable, the fair market values of its assets and liabilities which are deemed to be financial instruments. The Company's financial instruments consist primarily of cash, prepaid expenses, customer deposit, accounts payable and some other current liabilities. The Company believes that the carrying values of these financial instruments approximate their fair value due to the short-term nature of these items. 
+ 
+ As defined in FASB ASC Topic No. 820 10 (formerly SFAS 157-Fair Value Measurements), fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC Topic No. 820 10 requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements. The statement requires fair value measurements be classified and disclosed in one of the following categories:
+ 
+ Level 1:
+ Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. 
+
+ 
+
+ Level 2:
+ Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs such as interest rates and yield curves that are observable at commonly quoted intervals.
+
+ 
+
+ 
+
+ 
+ Level 3:
+ Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity). 
+
+ 
+ 
+
+As required by FASB ASC Topic No. 820 10, financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. 
+ 
+ The Company had no instruments re-measured to fair value on a recurring or non-recurring basis as of September 30, 2012 or September 30, 2011.
+ 
+ Net Earnings (Loss) Per Share
+ 
+Basic net earnings (loss) per common share are computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding during the period. Diluted net earnings (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for all periods presented in these consolidated financial statements, the diluted weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. For the twelve months ended September 30, 2012 and 2011, the company didn't have any potentially dilutive securities. 
+ 
+ Stock-Based Compensation
+ 
+The Company accounts for its stock-based compensation in which the Company obtains employee services in share-based payment transactions under FASB ASC Topic 718, Compensation Stock Compensation, which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the vesting period.
+ 
+ The Company also adopted FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees, to account for equity instruments issued to parties other than employees for acquiring goods or services. Such awards for services are recorded at either the fair value of the consideration received or the fair value of the instruments issued in exchange for such services, whichever is more reliably measurable.
+ 
+ During the year ended September 30, 2011, the Company recorded $274,705 of stock-based compensation to a distributor and $0 of stock-based compensation to employees. No stock based compensation was recorded during the year ended September 30, 2012.
+ 
+
+ Income Taxes
+ 
+ The Company accounts for income taxes in accordance with FASB ASC Topic 740, Income Taxes. Under FASB ASC Topic 740, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
+ 
+ The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company s financial position and results of operations for the current period. Based upon the level of losses and projections of the future taxable income over the periods in which the deferred tax assets are deductible, a full valuation allowance has been provided as management believes that it is more likely than not, based upon available evidence, that the deferred tax assets will not be realized.
+ 
+ Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.
+ 
+ 
+ F-8 
+ 
+ 
+ 
+
+ Recently Issued and Newly Adopted Accounting Pronouncements
+ 
+ In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, Technical Corrections and Improvements in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.
+ In August 2012, the FASB issued ASU 2012-03, Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update) in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.
+ In July 2012, the FASB issued ASU 2012-02, Intangibles Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.
+ In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This update defers the requirement to present items that are reclassified from accumulated other comprehensive income to net income in both the statement of income where net income is presented and the statement where other comprehensive income is presented. The adoption of ASU 2011-12 is not expected to have a material impact on our financial position or results of operations.
+ In December 2011, the FASB issued ASU No. 2011-11 Balance Sheet: Disclosures about Offsetting Assets and Liabilities ( ASU 2011-11 ). This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company is currently evaluating the impact, if any, that the adoption of this pronouncement may have on its results of operations or financial position.
+ NOTE 3 GOING CONCERN
+ 
+ The Company is a development stage company and has incurred a cumulative net loss since inception of $971,082. As of September 30, 2012, the Company had a positive working capital of $1,132,386, which, however, might be insufficient to finance the Company's business plan for the next twelve months. Due to the start-up nature, the Company expects to incur additional losses in the immediate future. To date, the Company s cash flow requirements have been primarily met through proceeds received from sales of common stock. The ability of the Company to emerge from the development stage is dependent upon the Company's successful efforts to raise sufficient capital and attain profitable operations.
+ 
+ Management s plan includes obtaining additional funds by increasing revenues and equity financing through the participation of its country sole distributors, wholesalers, dealers and retailers in the Multi-Level Marketing Franchise Investor Dealer Related (MLM-FIDR) concept; however there is no assurance of additional funding being available. These circumstances raise substantial doubt about the Company s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might arise as a result of this uncertainty. 
+NOTE 4 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment (PP&E) as of September 30, 2012 and September 30, 2011 consisted solely of the computer equipment and software with useful life of 5 and 3 years, respectively. Balances for the PP&E as of September 31, 2012 and September 30, 2011 were as follows:
+ 
+ 
+
+ 
+ 
+ September 30, 2012
+ 
+ September 30, 2011
+
+ Computer equipment & software
+ $
+ 6,664
+ $
+ 2,704
+
+ Less: accumulated depreciation
+ 
+ (1,188)
+ 
+ (318)
+
+ Property, plant and equipment, net
+ $
+ 5,476
+ $
+ 2,386
+
+ 
+ Depreciation expense for the twelve months ended September 30, 2012 and 2011 was $886 and $318, respectively.
+ 
+ NOTE 5 TRADEMARKS
+ 
+ The Company filed applications for trademarks on three of its products in their target markets: the United States, Singapore, Thailand, Hong Kong, Taiwan, Macau, Sri Lanka and Malaysia. As of September 30, 2012, the registration for all three products was completed in the United States, China (PRC), Hong Kong, Taiwan, Macau and Singapore, and still pending in other target markets. As of September 30, 2012 and September 30, 2011, the Company capitalized trademark costs of $31,183 and $25,821, respectively. Accumulated amortization at September 30, 2012 and September 30, 2011 was $2,659 and $0, respectively. During the twelve months ended September 30, 2012 and 2011, the Company recorded trademark amortization expense of $2,659 and $0. All trademarks have legal lives from 7 to 10 years and are amortized over their respective legal lives upon approval.
+ 
+ F-9 
+ 
+NOTE 6 COMMON STOCK
+ 
+ The total number of shares of capital stock, which the Company shall have authority to issue, is 500,000,000. These shares consist of one class of 500,000,000 shares designated as common stock at $0.001 par value ( Common Stock ).
+ 
+ Holders of shares of Common Stock shall be entitled to cast one vote for each share held at all stockholders meetings for all purposes, including the election of directors. The Common Stock does not have cumulative voting rights.
+ 
+ Unless there are prior arrangements made and agreed by the Company in writing, no holder of shares of stock of any class shall be entitled as a matter of right to subscribe for, or purchase, or receive any part of any new or additional issue of shares of stock of any class, or of any securities convertible into shares of any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of a dividend.
+ 
+ On July 6, 2010, 150,000,000 shares were issued to a consultant for services directly related to the S-1 registration and offering. These shares were valued at $0.25 per share and recorded as a reduction to additional paid- in capital due to it being an offering cost of the future S-1 offering. As a result of this transaction, additional paid in capital was reduced for the value of the shares equal to $37,500,000. This reduction was offset by recording an increase to common stock according to the par value of the shares issued equal to $150,000, and increasing additional paid in capital by $37,350,000. Due to the offsetting entries to additional paid in capital from the transaction, the net effect on equity was a reduction to additional paid in capital for $150,000 and an increase to the value of common stock for $150,000. In addition to this share issuance, the Company issued an additional 50,000,000 shares to the consultant for offering costs. The 50,000,000 additional shares were issued to convert the $50,000 payable owed to the consulting company (see Note 8). Through March 31, 2012, the Company paid a total of $345,000 cash to this consultant for offering costs. As of September 30, 2012 and September 30, 2011, nothing additional is owed to the consultant related to the S-1 registration and offering. 
+ 
+ On July 6, 2010, the Company received stock subscriptions from investors at various prices;
+ 
+ 1.
+ 58,000,000 shares of Common Stock sold to twelve stockholders, at a purchase price of $0.001 per share for cash received of $58,000, 
+ 2.
+ 113,000 shares of Common Stock sold to eleven stockholders at a price of $0.10 for cash received of $11,300, 
+ 3.
+ 106,672 shares of Common Stock sold to sixteen stockholders at a price of $0.15 per share for cash received of $16,000, 
+ 4.
+ 50,000 shares of Common Stock sold to two stockholders at a price of $0.20 per share for cash received of $10,000, 
+ 5.
+ 18,800 shares of Common Stock sold to eight stockholders at a price of $0.25 per share for cash received of $9,700. 
+ 6.
+ 20,000 shares were sold to directors for total consideration of $5,000 on August 9, 2010.
+ 
+ During 2011, pursuant to the terms of the Sole Distributorship Agreement dated October 11, 2010, the Company sold to Taiwan Cell Energy Enzymes Corporation ( TCEEC ) 125,000,000 shares of its common stock at price $0.008 per share for total proceeds of $1,000,000. The value of the shares issued was evaluated and found to be worth more than the cash received at a total value of $1,274,705. The difference of $274,705 represented compensation to the distributor. 
+ 
+The Company considered a third party valuation report to assist with valuing the underlying share issuances associated with the Sole Distributorship Agreement using the weighted discounted cash flow method and discounted market multiple method. The following values represent assumptions and key inputs to this model:
+
+ 1.
+ Risk adjusted discount rate 18.77% 
+ 2.
+ Long-Term growth rate 12.30% 
+ 3.
+ Discount for lack of marketability 53.14%
+ 
+
+ The specific value ascribed to the long term growth rate was based on the expectation of the Company s consistent long term growth within the current target markets and calculated based on guidance from the Company s valuation expert regarding industry results for long term growth within the industry. The growth rate used was based on the median historical growth rate of 535 companies selling within emerging markets with businesses related to the following: Food Processing, Retail (Distribution); and Retail (Specialty Lines). Since the Company believes that there is high demand for its products, it had no reason to think that the Company s long term growth rate would be below industry benchmarks. Given the Company s inception stage of operations and strong market demand for its product, the Company believes that the 12.3% growth rate is reasonable and comparable to similar companies within the field. 
+ 
+
+ In December of 2011 the Company s distributor Taiwan Cell Energy Enzymes Corporation ( TCEEC ) agreed to contribute $279,705 related to subsequent valuations of the shares originally purchased by the distributor for $1,000,000. The Company collected the full $279,705 during the year ended September 30, 2012 inclusive of $5,000 paid to the valuer as professional fees.
+ 
+
+ During the year ended September 30, 2012 the Company sold 10,000,000 shares for $0.30 per share for total proceeds of $3,000,000. Of this amount, $888,700 was collected during the year and the remaining $2,111,300 was held as a subscription receivable at September 30, 2012. The remaining amount is due in April of 2013 from TCEEC per the related signed promissory note agreement between both parties.
+ 
+
+ As of September 30, 2012, $39,992 was accrued as an offering cost due to the cost being directly related to the funds raised during the year then ended.
+ 
+ F-10 
+ 
+NOTE 7 RELATED PARTY TRANSACTIONS
+ 
+ On August 9, 2010, the Company sold 20,000 shares of common stock at $0.25 a share to its directors for total consideration of $5,000.
+ 
+ The CEO of the Company is the managing director of a consulting company, who provides consulting services for the Company. In January 2011, the Company converted $50,000 owed to this consulting company into 50,000,000 shares of the Company s common stock at the price of $0.001 per share. The $50,000 was recorded as an offering cost when owed due to the cost being directly related to the stock offering. The Company issued this consulting company an additional 150,000,000 shares valued at $150,000 also recorded as offering costs. From inception through September 30, 2011, the Company issued the aforementioned 200,000,000 shares recorded at $200,000 and paid total cash of $345,000 for offering costs. The Company also paid a total $100,000 for consulting services to this company during the year ended September 30, 2011 which was expensed as professional fees.
+ 
+ During the year ended September 30, 2011, the Company s President, Chief Executive Officer, Chief Financial Officer, and director, Mr. Yi Lung Lin paid some operating expenses on behalf of the Company. The amounts due to him for these expenses were $1,250 and $3,169 as of September 30, 2012 and September 30, 2011, respectively. 
+ 
+ During the twelve months ended September 30, 2012, the Company paid one of the directors of GEECIS $11,550 for IT consulting services. 
+ 
+ During the twelve months ended September 30, 2012, the Company reimbursed one of the directors of GEECIS $8,076 for rent and utilities in Sri Lanka.
+ 
+ On September 21, 2010, the Company entered into a Sole Marketing Agent Agreement with Access Management Consulting and Marketing Pte. Ltd. ( Access Management Consulting ) for the marketing of the Company s range of enzyme products and to source, select and interview country sole distributors for the distribution of our range of enzyme products to the world at large. The Company s President, Chief Executive Officer, Chief Financial Officer, and director, Mr. Yi Lung Lin, is also the President and Managing Director of Access Management Consulting.
+ 
+
+ On October 11, 2010, the Company entered into a Sole Distributorship Agreement (General Outlet-Human Consumption) with Taiwan Cell Energy Enzymes Corporation ( TCEEC ) for marketing and distribution of the Company s enzyme products in the Republic of China (Taiwan). Mr. Chen Wen Hsu, one of the Company s directors, has voting and investment control over TCEEC. As was provided for under the Sole Distributorship Agreement, during the year ended September 30, 2011, TCEEC had invested in the Company by subscribing to 125,000,000 shares of the Company s common stock at a price of $0.008 per share, for total proceeds of $1 million. The value of the shares issued was evaluated and found to be worth more than the cash received at a total value of $1,274,705. The difference of $274,705 represented compensation to the distributor. 
+ 
+ During the year ended September 30, 2012 and September 30, 2011, the Company recognized $60,993 and $120,558, respectively, in related party revenue from its customer TCEEC who is controlled by one of the Company s directors Ken Wen Hsu.
+ 
+
+ During the twelve months ended September 30, 2012, the Company collected $279,705 of contribution receivable of capital from its customer TCEEC who is controlled by the Company director Ken Wen Hsu.
+ 
+
+ During the year ended September 30, 2012, the Company received a total of $850,000 from TCEEC for 2,833,333 shares issued to them during the year then ended. TCEEC owed an additional $2,111,300 to the Company as of September 30, 2012 for 7,037,667 shares issued during the year then ended.
+ 
+
+ During the year ended September 30, 2012, the Company received a total of $9,000 from Access Equity Capital Management, a company controlled by Mr. Yi Lung Lin, in consideration of 30,000 shares issued to them. 
+ 
+
+ On February 15, 2012 the Board approved the appointment of Access Management Consulting and Marketing Pte Ltd (AMCM) to provide bookkeeping services in replacement of Albeck Financial Services. The Company s President is also the Managing Director of AMCM.
+ 
+
+ On September 6, 2012, the Board approved a monthly salary of $5,000 to the Company s President, Yi Lung Lin commencing September 1, 2012.
+ 
+
+ On September 21, 2012, the Board approved the engagement of Millar & Smith PLLC as the immigration lawyer to provide immigration legal service and to apply L-1 visa for the Company s President, YI Lung Lin and L-2 visa for his wife, Wang Huei Ling.
+ 
+
+ As of September 30, 2012, and as of September 30, 2011 there were amounts due to related parties of $74,467 and $3,169 respectively.
+ 
+
+ As of September 30, 2012, $39,992 was accrued as an offering cost owed to the consulting company controlled by Mr. Yi Lung Lin.
+ 
+
+ NOTE 8 INCOME TAXES
+ 
+
+ At September 30, 2012, the Company has available for federal income tax purposes a net operating loss carry forward from the year ended September 30, 2012, of approximately $693,392, that may be used to offset future taxable income. The net operating loss carry forward expires beginning the year 2031. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, since in the opinion of management based upon the earnings history of the Company; it is more likely than not that the benefits will not be realized. Based upon the change in ownership rules under section 382 of the Internal Revenue Code of 1986, if in the future the Company issues common stock or additional equity instruments convertible in common shares which result in an ownership change exceeding the 50% limitation threshold imposed by that section, all of the Company s net operating losses carry forwards may be significantly limited as to the amount of use in a particular years. 
+ 
+
+ In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. Based upon the level of losses and projections of the future taxable income over the periods in which the deferred tax assets are deductible, a full valuation allowance has been provided as management believes that it is more likely than not, based upon available evidence, that the deferred tax assets will not be realized.
+
+The difference between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense is as follows:
+
+ 
+ 
+
+ September 30, 2012 
+ September 31, 2011 
+ Statutory federal income tax rate 
+ (34.0%) 
+ 
+
+ 
+ (34.0 %) 
+ 
+
+ Change in valuation allowance
+ 34.0 %
+ 
+
+ 
+
+ 34.0 %
+ 
+
+ Effective tax rate 
+ 0.0 %
+ 
+
+ 
+
+ 0.0 %
+ 
+
+ 
+ 
+ The Company had deferred income tax assets as of September 30, 2012 and 2011 as follows:
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 2012
+ 
+
+ 2011
+
+ Deferred Tax assets:
+ 
+
+ 
+
+ 
+
+ 
+
+ Net operating loss carried forward
+ $
+ 242,687
+ $
+ 88,610
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Less: Valuation allowance
+ 
+
+ (242,687)
+ 
+
+ (88,610)
+
+ Gross deferred tax asset
+ $
+ -
+ $
+ -
+
+ 
+
+ 
+
+ The Company follows the provisions of uncertain tax positions as addressed in FASB Accounting Standards Codification 740-10-65-1. The Company recognized no increase in the liability for unrecognized tax benefits. The company has no uncertain tax position at September 30, 2012 or 2011 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. 
+ 
+
+ The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the periods presented. The Company had no accruals for interest and penalties at September 30, 2012 or 2011. The Company s utilization of any net operating loss carry forward may be unlikely due to its continuing losses.
+ 
+
+ As of September 30, 2012, the Company has tax receivable balance of $10,764. The tax receivable is related to the goods and services tax ( GST ) refund claimable from Singapore by the Singapore operations in fiscal year 2012. The Company recorded the amount as a current asset and offset such asset upon receiving refund from the tax authority without impacting revenues or expenses.
+ 
+
+ F-11 
+ 
+NOTE 9 - COMMITMENTS
+ 
+ On September 21, 2010, the Company reached an agreement with Specialty Enzymes and Biochemicals Co. (BSC Biochemicals), USA ( SEB ) for supplying various types of enzyme product to the Company under the Company s private label. SEB has been in operation since 1957 and is the largest enzyme manufacturer and enzymes provider in the US.
+ 
+ On October 11, 2010, the Company entered into a Sole Distributorship Agreement (General Outlet-Human Consumption) with Taiwan Cell Energy Enzymes Corporation ( TCEEC ) for marketing and distribution of the Company s enzyme products in the Republic of China (Taiwan). As provided for under the Sole Distributorship Agreement, TCEEC has committed to invest in the Company by subscribing to the Company s common stock for a total of $1 million on or before June 10, 2011 in exchange for 125 million common shares of the Company. As of December 31, 2011, all the shares under the agreement have been issued. In connection with the investment, the Company paid Access Finance and Securities (NZ) Limited, a company owned by the Company s President, Chief Executive Officer, Chief Financial Officer, and director, Mr. Yi Lung Lin, a commission of 4.5% of the capital raised. 
+ 
+ The Company leases a virtual office. The original lease term was from July 14, 2010 through July 31, 2011, and was a subject to the annual renewal. The lease was renewed for another year through July 14, 2012. During the year ended September 30, 2012, the Company leased a virtual office. The original lease term was from September 1, 2012 through October 31, 2013, and was subject to the annual renewal. During the year ended September 30, 2012, GESPL entered into a lease agreement for office premises. The lease term was from October 1, 2012 through March 31, 2013. GESPL has the option to renew the lease at the expiration of the lease. 
+ Fiscal year end 9/30: 2013
+ $27,828
+
+ 2014
+ $219
+
+ 2015
+ $ -
+
+ 2016
+ $ -
+
+ 2017
+ $ -
+
+ 
+ NOTE 10 - SUBSEQUENT EVENTS
+ 
+
+ On December 19, 2012, the Company entered into a Service Agreement with Access Management Consulting and Marketing Pte Ltd, Singapore for human resource services.
+ 
+
+ On December 19, 2012, the Company entered into a Service Agreement with Access Management Consulting and Marketing Pte Ltd, Singapore for products development services.
+
+ F-12 
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Genufood Energy Enzymes Corp.
+
+ (A Development Stage Company)
+
+ 
+
+ 
+
+ June 30, 2013
+
+ 
+
+ 
+
+ 
+
+ Index
+
+ 
+
+ 
+
+ Consolidated Balance Sheets (Unaudited)
+ F-1
+
+ 
+
+ 
+
+ Consolidated Statements of Operations and Other Comprehensive Loss (Unaudited)
+ F-2
+
+ 
+
+ 
+
+ Consolidated Statement of Stockholders Equity (Deficit)
+ F-3
+
+ 
+
+ 
+
+ Consolidated Statements of Cash Flows (Unaudited)
+ F-4
+
+ 
+
+ 
+
+ Notes to the Unaudited Consolidated Financial Statements
+ F-5
+
+ 
+
+ F-13 
+ 
+
+ 
+
+ GENUFOOD ENERGY ENZYMES CORP.
+
+ (A Development Stage Company)
+
+ CONSOLIDATED BALANCE SHEETS
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ June 30, 2013
+ 
+
+ September 30, 2012
+
+ 
+
+ 
+
+ (Unaudited)
+ 
+
+ 
+
+ ASSETS
+ 
+
+ 
+
+ 
+
+ 
+
+ Current assets
+ 
+
+ 
+
+ 
+
+ 
+
+ Cash
+ $
+ 697,852
+ $ 
+ 1,166,927 
+
+ Prepaid expenses
+ 
+
+ 77,476
+ 
+
+ 804 
+
+ Tax receivable
+ 
+
+ 1,240
+ 
+
+ 10,764 
+
+ Other receivable
+ 
+
+ 32
+ 
+
+ 142 
+
+ Other receivables related parties
+ 
+
+ 3,782
+ 
+
+ 393 
+
+ Inventory
+ 
+
+ 197,830
+ 
+
+ 93,742 
+
+ Total current assets
+ 
+
+ 978,212
+ 
+
+ 1,272,772 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Computer equipment and software, net of accumulated depreciation
+ 8,242
+ 
+
+ 5,476 
+
+ Intangibles and other assets
+ 
+
+ 
+
+ 
+
+ 
+
+ Trademarks, net of accumulated amortization
+ 
+
+ 31,050
+ 
+
+ 28,524 
+
+ Security deposit asset
+ 
+
+ 46,881
+ 
+
+ 34,721 
+
+ Total intangibles and other assets
+ 
+
+ 77,931
+ 
+
+ 63,245 
+
+ Total assets
+ $
+ 1,064,385
+ $ 
+ 1,341,493 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ LIABILITIES AND STOCKHOLDERS' EQUITY
+ 
+
+ 
+
+ 
+
+ 
+
+ Current liabilities
+ 
+
+ 
+
+ 
+
+ 
+
+ Accounts payable
+ $
+ 40,636
+ $ 
+ 16,180 
+
+ Accounts payable to related party
+ 
+
+ 70,173
+ 
+
+ 74,467 
+
+ Accrued expenses
+ 
+
+ 19,489
+ 
+
+ 49,739 
+
+ Total current liabilities
+ 
+
+ 
+
+ 130,298
+ 
+
+ 140,386 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Total liabilities
+ 
+
+ 
+
+ 130,298
+ 
+
+ 140,386 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Stockholders' equity
+ 
+
+ 
+
+ 
+
+ 
+
+ Common Stock, $0.001 par, 500,000,000 shares authorized; 394,245,972 and 393,308,472 shares issued and outstanding at June 30, 2013 and at September 30, 2012, respectively
+ 
+
+ 394,245
+ 
+
+ 393,308 
+
+ Additional paid in capital
+ 
+
+ 3,846,931
+ 
+
+ 3,891,010 
+
+ Subscription receivable
+ 
+
+ (1,485,932)
+ 
+
+ (2,111,300)
+
+ Stock payable
+ 
+
+ -
+ 
+
+ -
+
+ Deficit accumulated during development stage
+ 
+
+ (1,799,847)
+ 
+
+ (971,082)
+
+ Accumulated other comprehensive loss
+ 
+
+ (21,310)
+ 
+
+ (829)
+
+ Total stockholders' equity
+ 
+
+ 934,087
+ 
+
+ 1,201,107 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Total liabilities and stockholders' equity
+ $
+ 1,064,385
+ $ 
+ 1,341,493
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+The accompanying notes are an integral part of these consolidated financial statements
+ 
+
+ F-14 
+ 
+
+ GENUFOOD ENERGY ENZYMES CORP.
+
+ (A Development Stage Company)
+
+ CONSOLIDATED STATEMENTS OF OPERATIONS
+
+ (Unaudited) 
+
+ 
+
+ Three Months ended June 30, 2013
+ Three Months ended June 30, 2012
+ Nine Months Ended June 30, 2013
+ Nine Months Ended June 30, 2012
+ June 21, 2010 (Inception) through June 30, 2013
+ Revenue
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Revenue
+ 
+
+ 
+
+ 
+
+ $
+ 
+
+ 107,686
+ 
+
+ 
+
+ $
+ 
+
+ -
+ 
+
+ $
+ 119,987
+ 
+
+ -
+ 
+
+ 119,987
+ 
+
+ Related party revenue
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+ 1,653
+ 
+
+ -
+ 
+
+ 183,204
+ 
+
+ Total revenue
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 107,686
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+ 121,640
+ 
+
+ -
+ 
+
+ 303,191
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Cost of goods sold
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Product costs
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 57,728
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 63,880
+ 
+
+ -
+ 
+
+ 164,596
+ 
+
+ Label costs
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ -
+ 
+
+ -
+ 
+
+ 12,007
+ 
+
+ Other costs
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 1,422
+ 
+
+ -
+ 
+
+ 1,422
+ 
+
+ Total cost of goods sold
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 57,728
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+ 65,302
+ 
+
+ -
+ 
+
+ 178,025
+ 
+
+ Gross margin
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 49,958
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+ 56,338
+ 
+
+ -
+ 
+
+ 125,166
+ 
+
+ Expenses
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Sales commission expenses
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 
+
+ 
+
+ 4,138
+ 
+
+ 
+
+ 32,688
+ 
+
+ 4,138
+ 
+
+ 84,917
+ 
+
+ Compensation to distributors
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ -
+ 
+
+ -
+ 
+
+ 274,705
+ 
+
+ Product label design
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 
+
+ 
+
+ 5,970
+ 
+
+ 
+
+ 285
+ 
+
+ 14,713
+ 
+
+ 13,393
+ 
+
+ Advertising & business promotion
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 7,257
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 206,424
+ 
+
+ 13
+ 
+
+ 239,796
+ 
+
+ Website design
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 1,540
+ 
+
+ 
+
+ 
+
+ 
+
+ 4,195
+ 
+
+ 
+
+ 4,833
+ 
+
+ 13,961
+ 
+
+ 31,745
+ 
+
+ Bank service charge
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 632
+ 
+
+ 
+
+ 
+
+ 
+
+ 910
+ 
+
+ 
+
+ 4,219
+ 
+
+ 2,186
+ 
+
+ 9,846
+ 
+
+ Computer and internet expenses
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 1,033
+ 
+
+ 
+
+ 
+
+ 
+
+ 175
+ 
+
+ 
+
+ 8,297
+ 
+
+ 175
+ 
+
+ 9,107
+ 
+
+ Filing fees
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 1,874
+ 
+
+ 
+
+ 
+
+ 
+
+ 2,259
+ 
+
+ 
+
+ 5,004
+ 
+
+ 6,071
+ 
+
+ 18,637
+ 
+
+ License and permits
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 5
+ 
+
+ 
+
+ 
+
+ 
+
+ 687
+ 
+
+ 
+
+ 667
+ 
+
+ 787
+ 
+
+ 5,655
+ 
+
+ Meals and entertainment
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 2
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 12,812
+ 
+
+ 78
+ 
+
+ 18,778
+ 
+
+ Office supplies
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 936
+ 
+
+ 
+
+ 
+
+ 
+
+ 359
+ 
+
+ 
+
+ 1,880
+ 
+
+ 744
+ 
+
+ 3,738
+ 
+
+ Rent expense
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 19,032
+ 
+
+ 
+
+ 
+
+ 
+
+ 11,694
+ 
+
+ 
+
+ 42,021
+ 
+
+ 18,166
+ 
+
+ 89,253
+ 
+
+ Transfer agent fees
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 
+
+ 
+
+ 1,017
+ 
+
+ 
+
+ 5,169
+ 
+
+ 2,915
+ 
+
+ 24,985
+ 
+
+ Travel expense
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 4,055
+ 
+
+ 
+
+ 
+
+ 
+
+ 4,194
+ 
+
+ 
+
+ 34,858
+ 
+
+ 5,543
+ 
+
+ 83,121
+ 
+
+ Professional fees
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 145,052
+ 
+
+ 
+
+ 
+
+ 
+
+ 79,552
+ 
+
+ 
+
+ 399,289
+ 
+
+ 154,187
+ 
+
+ 838,044
+ 
+
+ Postage & shipping
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 2,478
+ 
+
+ 
+
+ 
+
+ 
+
+ 4
+ 
+
+ 
+
+ 5,546
+ 
+
+ 4
+ 
+
+ 6,339
+ 
+
+ Telephone expense
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 2,906
+ 
+
+ 
+
+ 
+
+ 
+
+ 111
+ 
+
+ 
+
+ 4,446
+ 
+
+ 112
+ 
+
+ 6,319
+ 
+
+ AGM & board meeting expenses
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ -
+ 
+
+ 17,083
+ 
+
+ 24,315
+ 
+
+ Depreciation expense
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 1,095
+ 
+
+ 
+
+ 
+
+ 
+
+ 177
+ 
+
+ 
+
+ 2,660
+ 
+
+ 553
+ 
+
+ 3,864
+ 
+
+ Amortization expense
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 557
+ 
+
+ 
+
+ 
+
+ 
+
+ 999
+ 
+
+ 
+
+ 2,236
+ 
+
+ 2,005
+ 
+
+ 4,895
+ 
+
+ Payroll expenses
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 34,528
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 95,798
+ 
+
+ -
+ 
+
+ 118,882
+ 
+
+ Subscription & registration fee
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 6,500
+ 
+
+ -
+ 
+
+ 6,500
+ 
+
+ Staff refreshment & recreation
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 1
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 854
+ 
+
+ -
+ 
+
+ 854
+ 
+
+ Logistics & storage expenses
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 1,561
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 5,976
+ 
+
+ -
+ 
+
+ 5,976
+ 
+
+ Repair and maintenance
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 337
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 2,761
+ 
+
+ -
+ 
+
+ 2,761
+ 
+
+ Forum and conference expenses
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 7,000
+ 
+
+ -
+ 
+
+ 7,000
+ 
+
+ Medical expenses
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 29
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 29
+ 
+
+ -
+ 
+
+ 244
+ 
+
+ Printing and Reproduction
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 625
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 625
+ 
+
+ 
+
+ 
+
+ 625
+ 
+
+ Courses and seminars
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ -
+ 
+
+ -
+ 
+
+ 72
+ 
+
+ Insurance expenses
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ -
+ 
+
+ -
+ 
+
+ 180
+ 
+
+ Miscellaneous expenses
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 21
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 21
+ 
+
+ -
+ 
+
+ 21
+ 
+
+ Total operating expenses
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 225,556
+ 
+
+ 
+
+ 
+
+ 
+
+ 116,441
+ 
+
+ 
+
+ 892,898
+ 
+
+ 243,434
+ 
+
+ 1,934,567
+ 
+
+ Total operating loss
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ (175,598)
+ 
+
+ 
+
+ 
+
+ 
+
+ (116,441)
+ 
+
+ 
+
+ (836,560)
+ 
+
+ (243,434)
+ 
+
+ (1,809,401)
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Other income
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+ 
+
+ Interest income
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 249
+ 
+
+ 
+
+ 
+
+ 
+
+ 335
+ 
+
+ 
+
+ 1,011
+ 
+
+ 910
+ 
+
+ 2,724
+ 
+
+ Miscellaneous income
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 2,628
+ 
+
+ 
+
+ 
+
+ 
+
+ -
+ 
+
+ 
+
+ 2,398
+ 
+
+ -
+ 
+
+ 2,398
+ 
+
+ Foreign Currency Exchange Gain/(Loss)
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 5
+ 
+
+ 
+
+ 
+
+ 
+
+ (2)
+ 
+
+ 
+
+ 4,386
+ 
+
+ 47
+ 
+
+ 4,432
+ 
+
+ Net loss
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ (172,716)
+ 
+
+ 
+
+ 
+
+ 
+
+ (116,108)
+ 
+
+ 
+
+ (828,765)
+ 
+
+ (242,477)
+ 
+
+ (1,799,847)
+ 
+
+ Foreign currency translation adjustment
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ (9,512)
+ 
+
+ 
+
+ 
+
+ 
+
+ 6,553
+ 
+
+ 
+
+ (20,481)
+ 
+
+ 3,810
+ 
+
+ (20,395)
+ 
+
+ Total Comprehensive loss
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ (182,228)
+ 
+
+ 
+
+ 
+
+ 
+
+ (109,555)
+ 
+
+ 
+
+ (849,246)
+ 
+
+ (238,667)
+ 
+
+ $(1,820,242)
+ 
+
+ Weighted average number of common shares outstanding-basic and diluted
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 393,658,747
+ 
+
+ 
+
+ 
+
+ 
+
+ 386,736,274
+ 
+
+ 
+
+ 393,425,230
+ 
+
+ 384,446,903
+ 
+
+ 
+
+ 
+
+ Net loss per share-basic and diluted
+ 
+
+ 
+
+ 
+
+ 
+
+ $
+ (0.00)
+ 
+
+ 
+
+ 
+
+ 
+
+ (0.00)
+ 
+
+ $
+ (0.00)
+ $
+ (0.00)
+ 
+
+ 
+
+ 
+
+ 
+
+ The accompanying notes are an integral part of these consolidated financial statements
+ 
+ 
+ F-15 
+ 
+ 
+ 
+
+ Genufood Energy Enzymes Corp.
+ 
+
+ (A Development Stage Company)
+ 
+
+ CONSOLIDATED STATEMENTS OF CASH FLOWS
+ 
+
+ (Unaudited)
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Nine months ended June 30, 2013
+ Nine months ended June 30, 2012
+ June 21, 2010 (Inception) through June 30, 2013
+ 
+ Operating activities
+ 
+ Net loss
+ $
+ (828,765)
+ $
+ (242,477)
+ $
+ (1,799,847)
+ 
+ Adjustment to reconcile net loss to net cash
+ 
+ used by operating activities:
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ Depreciation
+ 2,660
+ 553
+ 3,864
+ 
+ Amortization trademarks
+ 2,236
+ 2,005
+ 4,895
+ 
+ Compensation to distributor
+ -
+ -
+ 274,705
+ 
+ Change in operating assets and liabilities:
+ 
+ 
+ Prepaid expenses
+ (78,708)
+ (24,520)
+ (84,424)
+ 
+ Other Assets
+ (13,580)
+ (10,877)
+ (58,073)
+ 
+ Inventory
+ (104,088)
+ -
+ (189,768)
+ 
+ Tax receivable
+ 9,415
+ -
+ 
+ 9,415
+ 
+ Other receivable
+ (32)
+ -
+ (174)
+ 
+ Other receivable - RP
+ (3,742)
+ -
+ (4,135)
+ 
+ Accounts payable 
+ 24,456
+ 
+ (14,567)
+ 40,636
+ 
+ Accounts payable to related party
+ (10,314)
+ (668)
+ 63,489
+ 
+ Accrued expenses
+ (30,250)
+ 1,826
+ 
+ (20,248)
+ 
+ Net cash used in Operating activities
+ (1,030,712)
+ (288,725)
+ (1,759,665)
+ 
+ 
+ Investing
+ 
+ Purchase of computer equipment & software
+ (6,616)
+ (1,785)
+ (13,359)
+ 
+ Proceeds from sale of fixed assets
+ 1,000
+ -
+ 1,000
+ 
+ Cash paid for trademark registration
+ (4,762)
+ (5,362)
+ (35,945)
+ 
+ Net cash provided by Investing activities
+ (10,378)
+ (7,147)
+ 
+ (48,304)
+ 
+ 
+ Financing activities
+ 
+ Proceeds from sale of common shares 
+ 625,368
+ 38,700
+ 2,561,068
+ 
+ Proceeds from sale of common shares to founder
+ -
+ -
+ 58,000
+ 
+ Cash paid for offering costs
+ (37,122)
+ -
+ (382,122)
+ 
+ Capital contribution by shareholders
+ - 
+ 279,705
+ 289,605
+ 
+ Net cash provided by Financing activities
+ 588,246
+ 
+ 318,405
+ 2,526,551
+ 
+ 
+ EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 
+ (16,231)
+ (3,920)
+ (20,730)
+ 
+ Net increase (decrease ) in cash
+ (469,075)
+ 
+
+ 18,613
+ 
+
+ 697,852
+ 
+ Cash at beginning period
+ 1,166,927
+ 
+ 543,764
+ -
+ 
+ Cash at end of period
+ 697,852
+ 562,377
+ 97,852
+ 
+ Cash paid for interest - 
+ - 
+ - 
+ Cash paid for taxes 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ 
+ 
+ - 
+ Supplemental disclosure of cash flow information
+ Non-cash financing activities:
+ Cash owed for offering costs to related party
+ $
+ 6,020
+ 296,012
+ Shares issued for offering costs
+ $
+ 937
+ 150,937
+ Convertible accounts payable owed to related party
+ $
+ -
+ Converted to shares
+ $
+ 50,000
+ Issuance of stock payable
+ $
+ 600,000
+ Subscription/Contribution receivable
+ $
+ 1,005,000
+ 2,111,300
+ 
+ 
+ 
+ The accompanying notes are an integral part of these consolidated financial statements
+ 
+ F-16 
+ 
+
+ 
+ 
+ 
+
+ GENUFOOD ENERGY ENZYMES CORP.
+ (A Development Stage Company)
+ Notes to Consolidated Financial Statements
+ (Unaudited)
+ 
+
+ 
+
+ NOTE 1- BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
+ 
+ Organization and Business Operations
+ 
+ Genufood Energy Enzymes Corp., USA (the Company or GEEC ) was incorporated under the laws of the State of Nevada on June 21, 2010. GEEC is a start-up company and its main focus is to promote market, distribute and export a range of enzyme products for human and animal consumption manufactured in the Unites States for the Asian and ASEAN markets. The Company is the owner of the following trademarks, ProCellax and ProAnilax. These trademarks and GEEC as a trademark have been filed with the United States Patent and Trademark Office and registered with China (PRC), Hong Kong, Macau, Taiwan and Singapore. Similarly, these trademarks have been filed with the jurisdictions of Thailand, Malaysia, and Sri Lanka. 
+ 
+ The Company s objective is to commence marketing and distribution of American range of enzyme products for human and animal consumption to sole country distributors, wholesalers, dealers and retailers, as well as to the general public following the Company s Multi-Level Marketing Franchise Investor Dealer Related (MLM-FIDR) concept, to begin with, in Taiwan, and then to China, Hong Kong, Macau, Thailand, Malaysia, Singapore and Sri Lanka.
+ 
+
+ On May 24, 2011, GEEC Internet Sales (Private) Limited ( GEECIS ), a wholly owned subsidiary of GEEC, was established in the Democratic Socialist Republic of Sri Lanka. GEECIS was established initially to be responsible for GEEC s internet sales worldwide, but recently its role has been changed to that of a Sole Country Distributor.
+ 
+
+ On February 13, 2012 the Company invested and incorporated a wholly owned subsidiary company, GEEC Enzymes (S) Pte Ltd (GESPL) in Singapore with a view to be the Sole Country Distributor for ProCellax and ProAnilax in Singapore. GESPL has started initial test marketing for the range of ProCellax enzymes products.
+ 
+
+ The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.
+ The Company is in its development stage with no significant revenues. The Company s initial operations include organization, capital formation, target markets identification and developing marketing plans. 
+ 
+ The Company s fiscal year end is September 30.
+ 
+ NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
+ 
+ Basis of Presentation
+ 
+ The Company s unaudited consolidated financial statements included herein have been prepared in accordance with US GAAP and pursuant to the rules of the SEC. The Company believes that the presentations and disclosures herein are adequate for a fair presentation. The unaudited consolidated financial statements reflect all adjustments necessary for a fair presentation of the interim periods presented. These unaudited interim consolidated financial statements should be read in conjunction with the Company s audited consolidated financial statements included in its Form 10-K filed with the United States Securities and Exchange Commission on January 14, 2013. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. 
+ 
+ Development Stage Activities
+ 
+ The accompanying consolidated financial statements have been prepared in accordance with ASC 915-10-05, Development Stage Entities. A development - stage company is one in which planned principal operations have not commenced or, if its operations have commenced, but there have been no significant revenues.
+ 
+ F-17 
+ 
+
+ 
+ 
+
+ Use of Estimates
+ 
+ The preparation of the consolidated financial statements in conformity with generally accepted accounting principles in the United States of America ( US GAAP ) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 
+ 
+ Revenue Recognition
+ 
+ Our revenues are generated from sales of enzyme products under our private label.
+ 
+ For sales of enzyme products under our private label the Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and reduces it for the amount of estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the products have been shipped to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
+ 
+Foreign Currency Translation and Transactions
+ 
+ The reporting and functional currency of GEEC is the United States Dollar ( U.S. dollar ). The functional currency of GEECIS, a wholly owned subsidiary of GEEC, is the Sri Lanka Rupee ( LKR ). The functional currency of GESPL, a wholly owned subsidiary of GEEC, is the Singapore Dollar ( SGD ).
+ 
+ For financial reporting purposes, the financial statements of the Company s Sri Lanka subsidiary, which are prepared using the LKR, are translated into the Company s reporting currency, the U.S. dollar. Assets and liabilities are translated using the exchange rate on the balance sheet date, which was 0.0076 as of June 30, 2013 and 0.0077 as of September 30, 2012, respectively. Revenue and expenses are translated using average exchange rates prevailing during each reporting period. The average exchange rate of 0.0079 and 0.0075 was used to translate revenues and expenses for the periods ended June 30, 2013 and June 30, 2012, respectively. Stockholders equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in stockholders equity.
+ 
+
+ For financial reporting purposes, the financial statements of the Company s Singapore subsidiary, which are prepared using the SGD, are translated into the Company s reporting currency, the U.S. dollar. Assets and liabilities are translated using the exchange rate on the balance sheet date, which was 0.7881 as of June 30, 2013 and 0.8145 as of September 30, 2012. Revenue and expenses are translated using average exchange rates prevailing during each reporting period. The 0.8007 average exchange rate was used to translate revenues and expenses for the reporting period ended June 30, 2013. Stockholders equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in stockholders equity.
+ 
+ Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. The resulting exchange differences are included in the statements of operations.
+ 
+ No representation is made that the LKR or SGD amounts could have been, or could be converted into U.S. dollar at the above rates.
+ 
+ Cash and Cash Equivalents
+ 
+ The Company considers all highly liquid debt instruments with original maturities of three months or less when acquired to be cash equivalents. The Company places the majority of its cash and cash equivalents with financial institutions that are insured by the Federal Deposit Insurance Corporation ( FDIC ) up to $250,000. As of June 30, 2013, the Company had $697,732 cash in banks, $364,697 of which with one financial institution, which is $114,697 in excess of FDIC limit. As of September 30, 2012, the Company had $1,166,927 cash in banks, $598,228 and $485,270 of which were with two financial institutions, which is $583,498 in excess of FDIC limit. The Company mitigates this concentration of credit risk by monitoring the credit worthiness of financial institutions and its customers. 
+ 
+
+ In October 2008, the Federal government temporarily increased the FDIC insured limits up to a maximum of $250,000 per depositor until January 1, 2014, after which time the insured limits will return to $100,000.
+ Cash and cash equivalents which are held in foreign banks were $114,471 and $83,429 as of June 30, 2013 and September 30, 2012, respectively. For Singapore s operation, the Company placed its cash and cash equivalents denominated in Singapore Dollars with financial institutions that are insured by the Singapore Deposit Insurance Corporation ( SDIC ) up to Singapore Dollar 50,000. As of June 30, 2013 and September 30, 2012, $38,162 and $2,566 was insured, respectively. For Sri Lanka s operation, the Company placed its cash and cash equivalents denominated in Sri Lanka Rupee with financial institutions that are insured by the Sri Lanka Deposit Insurance Scheme ( SLDIS ) up to Sri Lanka Rupee 200,000. As of June 30, 2013 and September 30, 2012, $1,520 and $1,540 was insured, respectively.
+ F-18 
+ 
+ Beneficial Conversion Features
+ 
+From time to time, the Company may issue convertible debt that may have conversion prices that create an embedded beneficial conversion feature pursuant to the Emerging Issues Task Force guidance on beneficial conversion features. A beneficial conversion feature exists on the date a convertible liability is issued when the fair value of the underlying common stock to which the liability is convertible into is in excess of the face value of the liability. In accordance with this guidance, the intrinsic value of the beneficial conversion feature is recorded as a discount on the liability with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the term of the liability using the effective interest method. In cases where the liability relates to amounts owed for direct offering costs of an equity offering, the discount is charged to additional paid in capital with amortization.
+ 
+ Inventories
+ 
+The Company s inventories include enzyme products, packaging and labeling materials. Inventories are stated at the lower of cost or market value. Cost is determined using the weighted average cost method. As of June 30, 2013 and September 30, 2012, the Company had inventory balances of $197,830 and $93,742, respectively, which was comprised solely of enzyme products, packaging and labeling materials. 
+ 
+ Intangible Assets
+
+ The Company s intangible assets consist primarily of trademarks, which are carried at amortized cost. The company capitalizes filing and legal fees related to the trademark registration. All trademarks have legal lives from 7 to 10 years and are amortized over their respective legal lives upon approval (see Note 5-Trademarks).
+ 
+ The Company reviews its intangible assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. The Company assesses recoverability by reference to future cash flows from the products underlying these intangible assets. If these estimates change in the future, the Company may be required to record impairment charges for these assets. As of June 30, 2013, no impairment indicators were prevalent.
+ 
+
+ Security Deposit Asset
+
+ The security deposit is a refundable deposit, lodged with the Sampath Bank, for a facility to receive internet sales funds. In the event this facility was not obtained and instructions have been given to the Bank to refund the deposit. As of June 30, 2013, GESPL had a balance of $30,491 for refundable security deposit for the lease of retail store and $2,364 for refundable fitting out deposit for the retail store. As of June 30, 2013, GESPL had a balance of $11,822 for refundable security deposit for goods and services tax registration. During the nine months ended June 30, 2013, GESPL paid a deposit of $552 for rent of credit card terminals. As of June 30, 2013, the Company had a balance of $1,652 for a refundable security deposit to a consulting company.
+ Property, Plant and Equipment
+
+ Property, plant and equipment (PP&E) are stated at cost less accumulated depreciation. Gains or losses on disposals are recorded in the year of disposal. The cost of improvements that extend the life of property, plant, and equipment are capitalized. These capitalized costs may include structural improvements, equipment, and fixtures. All ordinary repair and maintenance costs are expensed as incurred.
+ 
+ The Company s PP&E as of June 30, 2013 and September 30, 2012 consisted of computer equipment and software with useful lives of five and three years, respectively. Depreciation is computed using the straight line method over the estimated useful lives. 
+
+ Fair Value of Financial Instruments 
+ 
+
+ FASB ASC Topic 825 Financial Instruments requires the Company to disclose, when reasonably attainable, the fair market values of its assets and liabilities which are deemed to be financial instruments. The Company's financial instruments consist primarily of cash, prepaid expenses, customer deposit, accounts payable and some other current liabilities. The Company believes that the carrying values of these financial instruments approximate their fair value due to the short-term nature of these items. 
+ 
+ As defined in FASB ASC Topic No. 820 10 (formerly SFAS 157-Fair Value Measurements), fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC Topic No. 820 10 requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements. The statement requires fair value measurements be classified and disclosed in one of the following categories:
+ 
+ Level 1:
+ Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. 
+
+ 
+
+ Level 2:
+ Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs such as interest rates and yield curves that are observable at commonly quoted intervals.
+
+ 
+
+ Level 3:
+ Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity). 
+
+ 
+ 
+
+As required by FASB ASC Topic No. 820 10, financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. 
+ 
+ The Company had no instruments re-measured to fair value on a recurring or non-recurring basis as of June 30, 2013 or September 30, 2012.
+ 
+ F-19 
+ 
+Net Earnings (Loss) Per Share
+ 
+ Basic net earnings (loss) per common share are computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding during the period. Diluted net earnings (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for all periods presented in these consolidated financial statements, the diluted weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. For the nine months ended June 30, 2013 and 2012, the company didn't have any potentially dilutive securities. 
+ 
+ Stock-Based Compensation
+ The Company accounts for its stock-based compensation in which the Company obtains employee services in share-based payment transactions under FASB ASC Topic 718, Compensation Stock Compensation, which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the vesting period.
+ 
+ The Company also adopted FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees, to account for equity instruments issued to parties other than employees for acquiring goods or services. Such awards for services are recorded at either the fair value of the consideration received or the fair value of the instruments issued in exchange for such services, whichever is more reliably measurable.
+ 
+ No stock based compensation was recorded during the nine months ended June 30, 2013 or June 30, 2012.
+ 
+ Income Taxes
+ 
+ The Company accounts for income taxes in accordance with FASB ASC Topic 740, Income Taxes. Under FASB ASC Topic 740, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
+ 
+ The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company s financial position and results of operations for the current period. Based upon the level of losses and projections of the future taxable income over the periods in which the deferred tax assets are deductible, a full valuation allowance has been provided as management believes that it is more likely than not, based upon available evidence, that the deferred tax assets will not be realized.
+ 
+
+ As of June 30, 2013, the Company has a tax receivable balance of $1,240. The tax receivable is related to the goods and services tax ( GST ) refund claimable from Singapore by the Singapore operations for the three months ended June 30, 2013. The Company recorded the amount as a current asset and offset such asset upon receiving refund from the tax authority without impacting revenues or expenses.
+ 
+ Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.
+ 
+ Recent Accounting Pronouncements
+ 
+
+ New accounting pronouncements are issued by FASB that are adopted by the Company as of the specified date. There have been no developments to recently issued accounting standards, including expected dates of adoption and estimated effects on our financial statements from those disclosed in our previous quarterly report for the period ended March 31, 2013.
+ 
+
+ NOTE 3 GOING CONCERN
+ 
+ The Company is a development stage company and has incurred a cumulative net loss since inception of $1,799,847. As of June 30, 2013, the Company had a positive working capital of $847,914, which, however, might be insufficient to finance the Company's business plan for the next twelve months. Due to the start-up nature, the Company expects to incur additional losses in the immediate future. To date, the Company s cash flow requirements have been primarily met through proceeds received from sales of common stock. The ability of the Company to emerge from the development stage is dependent upon the Company's successful efforts to raise sufficient capital and attain profitable operations.
+ 
+ Management s plan includes obtaining additional funds by increasing revenues and equity financing through the participation of its country sole distributors, wholesalers, dealers and retailers in the Multi-Level Marketing Franchise Investor Dealer Related (MLM-FIDR) concept; however there is no assurance of additional funding being available. These circumstances raise substantial doubt about the Company s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might arise as a result of this uncertainty.
+ NOTE 4 PROPERTY, PLANT AND EQUIPMENT
+ 
+ Property, plant and equipment (PP&E) as of June 30, 2013 and September 30, 2012 consisted solely of the computer equipment and software with useful life of 5 and 3 years, respectively. Balances for the PP&E as of June 30, 2013 and September 30, 2012 were as follows:
+ 
+ 
+ 
+
+ 
+ 
+ June 30, 2013
+ 
+ September 30, 2012
+
+ Computer equipment & software
+ $
+ 12,032
+ $
+ 6,664
+
+ Less: accumulated depreciation
+ 
+ (3,790) 
+ 
+ (1,188) 
+
+ Property, plant and equipment, net
+ $
+ 8,242
+ $
+ 5,476
+
+ 
+ Depreciation expense for the nine months ended June 30, 2013 and 2012 was $2,660 and $553, respectively.
+ 
+ F-20 
+ 
+
+ NOTE 5 TRADEMARKS
+ 
+ The Company filed applications for trademarks on three of its products in their target markets: the United States, Singapore, Thailand, Hong Kong, Taiwan, Macau, Sri Lanka and Malaysia. As of December 31, 2012, the registration for all three products was completed in the United States, China (PRC), Hong Kong, Taiwan, Macau and Singapore, and still pending in other target markets. As of June 30, 2013 and September 30, 2012, the Company capitalized trademark costs of $35,945 and $31,183, respectively. Accumulated amortization at June 30, 2013 and September 30, 2012 was $4,895 and $2,659, respectively. During the nine months ended June 30, 2013 and 2012, the Company recorded trademark amortization expense of $2,236 and $2,005. All trademarks have legal lives from 7 to 10 years and are amortized over their respective legal lives upon approval.
+ 
+ NOTE 6 COMMON STOCK
+ 
+ The total number of shares of capital stock, which the Company shall have authority to issue, is 500,000,000. These shares consist of one class of 500,000,000 shares designated as common stock at $0.001 par value ( Common Stock ).
+ 
+ Holders of shares of Common Stock shall be entitled to cast one vote for each share held at all stockholders meetings for all purposes, including the election of directors. The Common Stock does not have cumulative voting rights.
+ 
+ Unless there are prior arrangements made and agreed by the Company in writing, no holder of shares of stock of any class shall be entitled as a matter of right to subscribe for, or purchase, or receive any part of any new or additional issue of shares of stock of any class, or of any securities convertible into shares of any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of a dividend.
+ 
+ On July 6, 2010, 150,000,000 shares were issued to a consultant for services directly related to the S-1 registration and offering. These shares were valued at $0.25 per share and recorded as a reduction to additional paid- in capital due to it being an offering cost of the future S-1 offering. As a result of this transaction, additional paid in capital was reduced for the value of the shares equal to $37,500,000. This reduction was offset by recording an increase to common stock according to the par value of the shares issued equal to $150,000, and increasing additional paid in capital by $37,350,000. Due to the offsetting entries to additional paid in capital from the transaction, the net effect on equity was a reduction to additional paid in capital for $150,000 and an increase to the value of common stock for $150,000. In addition to this share issuance, the Company issued an additional 50,000,000 shares to the consultant for offering costs. The 50,000,000 additional shares were issued to convert the $50,000 payable owed to the consulting company (see Note 8). Through June 30, 2013, the Company paid a total of $345,000 cash to this consultant for offering costs. As of June 30, 2013 nothing additional is owed to the consultant related to the S-1 registration and offering. 
+ 
+ On July 6, 2010, the Company received stock subscriptions from investors at various prices;
+ 
+ 1.
+ 58,000,000 shares of Common Stock sold to twelve stockholders, at a purchase price of $0.001 per share for cash received of $58,000, 
+ 2.
+ 113,000 shares of Common Stock sold to eleven stockholders at a price of $0.10 for cash received of $11,300, 
+ 3.
+ 106,672 shares of Common Stock sold to sixteen stockholders at a price of $0.15 per share for cash received of $16,000, 
+ 4.
+ 50,000 shares of Common Stock sold to two stockholders at a price of $0.20 per share for cash received of $10,000, 
+ 5.
+ 18,800 shares of Common Stock sold to eight stockholders at a price of $0.25 per share for cash received of $9,700. 
+ 6.
+ 20,000 shares were sold to directors for total consideration of $5,000 on August 9, 2010.
+ 
+
+ During 2011, pursuant to the terms of the Sole Distributorship Agreement dated October 11, 2010, the Company sold to Taiwan Cell Energy Enzymes Corporation ( TCEEC ) 125,000,000 shares of its common stock at price $0.008 per share for total proceeds of $1,000,000. The value of the shares issued was evaluated and found to be worth more than the cash received at a total value of $1,274,705. The difference of $274,705 represented compensation to the distributor. 
+ 
+ The Company considered a third party valuation report to assist with valuing the underlying share issuances associated with the Sole Distributorship Agreement using the weighted discounted cash flow method and discounted market multiple method. The following values represent assumptions and key inputs to this model:
+ 1.
+ Risk adjusted discount rate 18.77% 
+ 2.
+ Long-Term growth rate 12.30% 
+ 3.
+ Discount for lack of marketability 53.14%
+ 
+The specific value ascribed to the long term growth rate was based on the expectation of the Company s consistent long term growth within the current target markets and calculated based on guidance from the Company s valuation expert regarding industry results for long term growth within the industry. The growth rate used was based on the median historical growth rate of 535 companies selling within emerging markets with businesses related to the following: Food Processing, Retail (Distribution); and Retail (Specialty Lines). Since the Company believes that there is high demand for its products, it had no reason to think that the Company s long term growth rate would be below industry benchmarks. Given the Company s inception stage of operations and strong market demand for its product, the Company believes that the 12.3% growth rate is reasonable and comparable to similar companies within the field. 
+ In December of 2011 the Company s distributor Taiwan Cell Energy Enzymes Corporation ( TCEEC ) agreed to contribute $279,705 related to subsequent valuations of the shares originally purchased by the distributor for $1,000,000. The Company collected the full $279,705 during the year ended September 30, 2012 inclusive of $5,000 paid to the valuer as professional fees.
+ 
+
+ During the year ended September 30, 2012 the Company sold 10,000,000 shares for $0.30 per share for total proceeds of $3,000,000. Of this amount, $491,589 was collected during the nine months ended March 31, 2013 and the remaining $1,819,711 was held as a subscription receivable at March 31, 2013. The remaining amount is due in April of 2013 from TCEEC per the related signed promissory note agreement between both parties. On February 27, 2013, the Promissory Note cancelled since TCEEC could not honor. The subscription receivable balance of $1,819,711 was transferred to an existing shareholder and a related party. During the period ended June 30, 2013, $333,779 were collected, therefore the balance of subscription receivable as of June 30, 2013 was $1,485,932. 
+ 
+
+ During the period ended March 31, 2013 the Company signed a Term Sheet with Kodiak Capital Group in respect of a future potential investment of US$3,000,000 to be received in draws by the Company with shares to be granted at a discount to trading prices. The final terms of the agreement were not executed as of March 31, 2013, however with execution of the term sheet the Company was required to pay $15,000 in cash and issue shares worth $150,000. These amounts were recorded as offering costs based on the future prospective offering and accrued for within accounts payable and stock payable as of March 31, 2013. These shares have been issued in May 2013, therefore the balance of stock payable as of June 30, 2013 was zero.
+ 
+
+ The Company received $625,368 from previously subscribed shares during the nine months ended June 30, 2013.
+ 
+
+ As of June 30, 2013, $6,020 was accrued and $22,122 was paid as offering costs due to the cost being directly related to the funds raised during the nine months ended June 30, 2013.
+ 
+
+ F-21 
+ 
+NOTE 7 RELATED PARTY TRANSACTIONS
+ 
+ On August 9, 2010, the Company sold 20,000 shares of common stock at $0.25 a share to its directors for total consideration of $5,000.
+ The CEO of the Company is the managing director of a consulting company, who provides consulting services for the Company. In January 2011, the Company converted $50,000 owed to this consulting company into 50,000,000 shares of the Company s common stock at the price of $0.001 per share. The $50,000 was recorded as an offering cost when owed due to the cost being directly related to the stock offering. The Company issued this consulting company an additional 150,000,000 shares valued at $150,000 also recorded as offering costs. From inception through September 30, 2011, the Company issued the aforementioned 200,000,000 shares recorded at $200,000 and paid total cash of $345,000 for offering costs. The Company also paid a total $100,000 for consulting services to this company during the year ended September 30, 2011 which was expensed as professional fees.
+ 
+ During the year ended September 30, 2011, the Company s President, Chief Executive Officer, Chief Financial Officer, and director, Mr. Yi Lung Lin paid some operating expenses on behalf of the Company. The amounts due to him for these expenses were $1,250 and $0 as of June 30, 2013 and September 30, 2012, respectively. 
+ 
+ During the twelve months ended September 30, 2012, the Company paid one of the directors of GEECIS $11,550 for IT consulting services. 
+ 
+ During the twelve months ended September 30, 2012, the Company reimbursed one of the directors of GEECIS $8,076 for rent and utilities in Sri Lanka.
+ 
+ On September 21, 2010, the Company entered into a Sole Marketing Agent Agreement with Access Management Consulting and Marketing Pte. Ltd. ( Access Management Consulting ) for the marketing of the Company s range of enzyme products and to source, select and interview country sole distributors for the distribution of our range of enzyme products to the world at large. The Company s President, Chief Executive Officer, Chief Financial Officer, and director, Mr. Yi Lung Lin, is also the President and Managing Director of Access Management Consulting.
+ 
+ On October 11, 2010, the Company entered into a Sole Distributorship Agreement (General Outlet-Human Consumption) with Taiwan Cell Energy Enzymes Corporation ( TCEEC ) for marketing and distribution of the Company s enzyme products in the Republic of China (Taiwan). Mr. Chen Wen Hsu, one of the Company s directors, has voting and investment control over TCEEC. As was provided for under the Sole Distributorship Agreement, during the year ended September 30, 2011, TCEEC had invested in the Company by subscribing to 125,000,000 shares of the Company s common stock at a price of $0.008 per share, for total proceeds of $1 million. The value of the shares issued was evaluated and found to be worth more than the cash received at a total value of $1,274,705. The difference of $274,705 represented compensation to the distributor. 
+ 
+
+ During the year ended September 30, 2012 and September 30, 2011, the Company recognized $60,993 and $120,558, respectively, in related party revenue from its customer TCEEC who is controlled by one of the Company s directors Ken Wen Hsu.
+ 
+
+ During the nine months ended June 30, 2013 and June 30, 2012, the Company recognized $1,653 and $0, respectively, in related party revenue from Yi Lung Lin who is the President of the Company and Access Management Consulting and Marketing Pte Ltd (AMCM) where Yi Lung Lin is the Managing Director of AMCM.
+ 
+
+ During the twelve months ended September 30, 2012, the Company collected $279,705 of contribution receivable of capital from its customer TCEEC who is controlled by the Company director Ken Wen Hsu.
+ 
+
+ During the year ended September 30, 2012, the Company received a total of $850,000 from TCEEC for 2,833,333 shares issued to them during the year then ended. TCEEC owed an additional $2,111,300 to the Company as of September 30, 2012 for 7,037,667 shares issued during the year then ended.
+ 
+
+ During the year ended September 30, 2012, the Company received a total of $9,000 from Access Equity Capital Management ( AECM ), a company controlled by Mr. Yi Lung Lin, in consideration of 30,000 shares issued to them. 
+ 
+
+ On February 15, 2012 the Board approved the appointment of Access Management Consulting and Marketing Pte Ltd (AMCM) to provide bookkeeping services in replacement of Albeck Financial Services. The Company s President is also the Managing Director of AMCM.
+ 
+
+ On September 6, 2012, the Board approved a monthly salary of $5,000 to the Company s President, Yi Lung Lin commencing September 1, 2012.
+ 
+
+ On September 21, 2012, the Board approved the engagement of Millar & Smith PLLC as the immigration lawyer to provide immigration legal service and to apply L-1 visa for the Company s President, YI Lung Lin and L-2 visa for his wife, Wang Huei Ling.
+ 
+
+ On September 24, 2012, NATfresh Beverages has purchased USD$500,000 worth of IPO GEEC shares from the Company. Mr. Yi Lung Lin is the President, CEO, CFO, Treasure, Secretary and Principal Accounting Officer of NATfresh Beverages Corp.
+ 
+
+ On February 27, 2013, the Promissory Note Agreement entered between the Company and TCEEC was cancelled since TCEEC could not honor. Shares issued in relation to the subscription receivable were cancelled and reissued to AECM and an existing shareholder, both of which have signed a Promissory Note Agreement with the Company respectively to assure the obligation.
+ 
+
+ During the nine months ended June 30, 2013 the Company paid $37,122 to Access Finance and Securities (NZ) Limited as offering costs. 
+ 
+
+ On March 15, 2013, the Company filed a claim against TCEEC in the United States District Court, District of Nevada for breach of contract pursuant to Clause 13 of the Sole Distributorship Agreement. Total number of the shares at the time of default was 75,000,000. According to the Company s most recent Form S-1/A filing with the United States Securities and Exchange Commission, filed on March 9, 2012, the last subscription agreement the Company signed was at a price of $0.25 per share. At this revised price per share, factoring in: (i) payments actually made, (ii) the fair market value of the remainder of the distribution agreement, and (iii) other costs, the claim is for $17,875,465. 
+ 
+
+ On April 5, 2013, the Company applied to the Nevada Court for an Order (Injunction) to restrain TCEEC from transferring their shares. The court has allowed for the injunction and set April 18, 2013 for hearing.
+ 
+
+ As of June 30, 2013, and as of September 30, 2012 there were amounts due to related parties of $70,173 and $74,467 respectively.
+ 
+ During the nine months ended June 30, 2013, the Company received a total of $155,000 from TCEEC, $270,368 from an existing shareholder and $200,000 from a related party, respectively for the subscription receivable. 
+ 
+
+ F-22 
+ 
+NOTE 8 COMMITMENTS AND CONTINGENCIES 
+ 
+ On September 21, 2010, the Company reached an agreement with Specialty Enzymes and Biochemicals Co. (BSC Biochemicals), USA ( SEB ) for supplying various types of enzyme product to the Company under the Company s private label. SEB has been in operation since 1957 and is the largest enzyme manufacturer and enzymes provider in the US.
+ 
+ During the year ended September 30, 2012, the Company leased a virtual office. The original lease term was from September 1, 2012 through September 30, 2013, and was subject to the annual renewal. On February 23, 2013, the Company entered into a virtual office agreement in Los Angeles. The Agreement is on a month to month basis. One month s written notification is required by either party to terminate this Agreement. During the year ended September 30, 2012, GESPL entered into a lease agreement for office premises. The lease term was from October 1, 2012 through March 31, 2013. GESPL has the option to renew the lease at the expiration of the lease. During the period ended June 30, 2013 GESPL entered into a memorandum of understanding with a related party for sharing of office premises for three years and a lease agreement with Harmony Convention Holding Pte Ltd for provision of retail shop premises for three years.
+ Fiscal year end 9/30:
+ 2013
+ $73,218
+
+ 2014
+ $181,560
+
+ 2015
+ $181,560
+
+ 2016
+ $76,370 
+
+ 2017
+ $ -
+
+ 
+
+ On March 14, 2013 the Company has instructed their Attorney, Atkinson Law Associates P.C. to file a Complaint with the United States District Court, District of Nevada for a civil claim against Taiwan Cell Energy Enzymes Corporation in respect of a breach of contract arising from the Sole Distributorship Agreement (General Outlet Human Consumption) and Private Placement dated October 11, 2010. Case 2:13-cv-00435.
+ 
+
+ NOTE 9 - SUBSEQUENT EVENTS
+ 
+
+ On July 3, 2013, the Company received $85,932.60 being the first payment of the Promissory Note of $985,932.60 from Access Equity Capital Management Corp in respect of their subscription for the 3,286,442 registered shares (Form S-1).
+ 
+
+ On July 5, 2013, the Company received $100,000 being the second payment of the Promissory Note of $985,932.60 from Access Equity Capital Management Corp in respect of their subscription for the 3,286,442 registered shares (Form S-1).
+ 
+
+ On July 8, 2013, the Company received $100,000 being the third payment of the Promissory Note of $985,932.60 from Access Equity Capital Management Corp in respect of their subscription for the 3,286,442 registered shares (Form S-1).
+ 
+
+ On July 8, 2013, the Company notified Taiwan Cell Energy Enzyme Corp (TCEEC) that the Sole Distributorship Agreement (General Outlet-Human Consumption) and Private Placement dated October 11, 2010 has been terminated. 
+ 
+
+ On July 9, 2013, the Company received $100,000 being the fourth payment of the Promissory Note of $985,932.60 from Access Equity Capital Management Corp in respect of their subscription for the 3,286,442 registered shares (Form S-1).
+ 
+
+ On July 10, 2013, the Company received $100,000 being the fifth payment of the Promissory Note of $985,932.60 from Access Equity Capital Management Corp in respect of their subscription for the 3,286,442 registered shares (Form S-1).
+ 
+
+ On July 11, 2013, the Company signed the Investment Agreement and Registration Rights Agreement with Kodiak Capital Group, LLC in respect of their investment of US$ 3 million in the common shares of the Company. 
+ 
+
+ On July 14, 2013, the Company s Singapore subsidiary, Genufood Enzymes (S) Pte Ltd opened the first retail chain store at Suntec City Mall, Singapore.
+ 
+ On July 24, 2013, the Company s Singapore subsidiary, Genufood Enzymes (S) Pte Ltd signed an agreement with Standard Charted Bank, Singapore for the participation in the Standard Chartered Bank Lifestyle Programme . This Programme is for a year expiring July 31, 2014 whereby credit cardholders of Standard Chartered Bank, Singapore will be entitled to a 20% discount on Procellax range of enzyme products purchased and an additional 10% if their cardholders are also GEEC Enzyme Club Members.
+ 
+
+ On July 26, 2013, the Company filed the second Registration Statement (Form S-1) with the SEC in respect of the investment by Kodiak Capital Group, LLC for the subscription of US$3 million of the common shares of the Company.
+ 
+
+ On August 8, 2013, the SEC declared the second Registration Statement (form S-1) effective in respect of the purchase of the common shares of the Company of US$3 million by Kodiak Capital Group, LLC.
+ 
+
+ On August 8, 2013, the name of the Company s wholly owned subsidiary in Sri Lanka, GEEC Internet Sales (Private) Limited was changed to Genufood Enzymes Lanka (Private) Limited.
+ 
+
+ On September 26, 2013, the Company received $500,000 being the sixth and final payment of the Promissory Note of $985,932.60 from Access Equity Capital Management Corp in respect of their subscription for the 3,286,442 registered shares (Form S-1).
+ 
+
+ On October 3, 2013, the Company entered into an Equity Purchase Agreement ( EPA ) Term Sheet with Southridge Partners II LP ( Southridge ) whereby Southridge is committed to purchase up to US$20,000,000 worth of common shares of GEEC within a period of two years. 
+ On October 17, 2013, the Company signed the Equity Purchase Agreement, and Registration Rights Agreement including a Promissory Note of $125,000 with Southridge Partners II LP. The Promissory Note is due on May 31, 2014.
+ On October 17, 2013, the Company s Singapore subsidiary, Genufood Enzymes (S) pte Ltd entered into an agreement with Network for electronic Transfers (Singapore) Pte Ltd ( NETS ) for the subscription to NETS System for the payment of the goods purchased at GEEC Retail Chain Store at Suntec City Mall, Singapore and to provide a 20% rebate to members of NETS.
+ On October 25, 2013, the Company filed Form 8-K in respect of the disclosure and notification of the Equity Purchase Agreement, and Registration Rights Agreement including a Promissory Note signed with Southridge Partners II LP for the purchase of up to $20,000,000 of the Company s common stock over a two-year period.
+ 
+ F-23 
+ 
+
+ 
+
+ 
+
+ Part II
+ 
+
+ Information Not Required In the Prospectus
+ Other Expenses of Issuance and Distribution 
+ The estimated costs of this offering are as follows: 
+ Securities and Exchange Commission registration fee 
+ $
+ 38.64
+
+ Accounting fees and expenses 
+ $
+ 5,000.00
+
+ Legal fees and expenses 
+ $
+ 50,000.00
+
+ Edgar filing fees 
+ $
+ 1,000.00
+
+ Miscellaneous expenses
+ $
+ 845,961.36
+
+ Total 
+ $
+ 902,000.00
+
+ * All amounts are estimates other than the Commission's registration fee. 
+ We are paying all expenses of the offering listed above. No portion of these expenses will be borne by the selling shareholders. The selling shareholders, however, will pay any other expenses incurred in selling their common stock, including any brokerage commissions or costs of sale. 
+ 
+Indemnification of Directors and Officers
+ 
+Our sole officer and our directors are indemnified as provided by the Nevada Revised Statutes and our bylaws. 
+ Under the NRS, director immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company's articles of incorporation that is not the case with our articles of incorporation. Excepted from that immunity are:
+ (1) 
+ 
+A willful failure to deal fairly with the company or its shareholders in connection with a matter in which the director has a material conflict of interest;
+
+ (2)
+ 
+ A violation of criminal law (unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful);
+
+ 
+ (3)
+ 
+A transaction from which the director derived an improper personal profit; and 
+
+ 
+ (4) 
+ 
+Willful misconduct. 
+
+ Our bylaws provide that we will indemnify our directors and officers to the fullest extent not prohibited by Nevada law; provided, however, that we may modify the extent of such indemnification by individual contracts with our directors and officers; and, provided, further, that we shall not be required to indemnify any director or officer in connection with any proceeding (or part thereof) initiated by such person unless:
+ 
+ (1) 
+ Such indemnification is expressly required to be made by law;
+
+ 
+ 
+ 
+
+ 
+ (2) 
+ The proceeding was authorized by our Board of Directors;
+
+ 
+ 
+ 
+
+ 
+ (3) 
+ Such indemnification is provided by us, in our sole discretion, pursuant to the powers vested us under Nevada law; or
+
+ 
+ 
+ 
+
+ 
+ (4) 
+ Such indemnification is required to be made pursuant to the bylaws.
+
+ Our bylaws provide that we will advance all expenses incurred to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was our director or officer, or is or was serving at our request as a director or executive officer of another company, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request. This advance of expenses is to be made upon receipt of an undertaking by or on behalf of such person to repay said amounts should it be ultimately determined that the person was not entitled to be indemnified under our bylaws or otherwise. 
+ Our bylaws also provide that no advance shall be made by us to any officer in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made: (a) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding; or (b) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision- making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to our best interests. 
+
+ 64 
+ 
+
+Recent Sales of Unregistered Securities 
+ 
+On May 27, 2013, we issued 937,500 shares to Kodiak as commitment shares for their financing.
+ 
+
+ These shares were issued pursuant to Section 4(2) of the Securities Act of 1933 (the "Securities Act"). In connection with this issuance, Kodiak was provided with access to all material aspects of the company, including the business, management, offering details, risk factors and financial statements. They also represented to us that they were acquiring the shares as a principal for their own account with investment intent. Kodiak also represented that they are an accredited investor and that they were sophisticated, having prior investment experience and having adequate and reasonable opportunity and access to any corporate information necessary to make an informed decision. This issuance of securities was not accompanied by general advertisement or general solicitation. The shares were issued with a Rule 144 restrictive legend.
+ 
+Exhibits 
+ Exhibit 
+ 
+ 
+ Number 
+ 
+ Description 
+
+ 
+
+ 
+
+ 
+
+ 3.1
+ (1)
+ Articles of Incorporation
+
+ 3.2
+ (1)
+ By-Laws
+
+ 5.1
+ 
+
+ Legal Opinion of Dean Law Corp., with consent to use
+
+ 10.1
+ (2)
+ Equity Purchase Agreement with Southridge Partners II, LP dated October 17, 2013
+
+ 10.2
+ (2)
+ Registration Rights Agreement with Southridge Partners II, LP dated October 17, 2013
+
+ 10.3
+ (2)
+ Promissory Note issued to Southridge Partners II, LP dated October 17, 2013
+
+ 10.4
+ 
+
+ Agreement with Access Finance and Securities (NZ) Limited
+
+ 10.5
+ 
+
+ Agreement with Access Management Consulting and Marketing PTE Ltd.
+
+ 23.1
+ 
+ Consent of M&K CPAS, PLLC
+
+ 
+
+ (1)
+ Previously filed on our Form S-1 filed with the Commission on January 20, 2011.
+ (2)
+ Previously filed on our Form 8-K filed with the Commission on October 25, 2013.
+ 
+ 65 
+ 
+
+ The undersigned registrant hereby undertakes: 
+ 1. 
+ To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
+
+ 
+ 
+ 
+
+ 
+
+ 
+
+ (a) 
+ To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
+ 
+
+ 
+ 
+ 
+ 
+
+ 
+
+ (b) 
+ To reflect in the prospectus any facts or events arising after the effective date of this registration statement, or most recent post-effective amendment, which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement; Notwithstanding the forgoing, any increase or decrease in Volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the commission pursuant to Rule 424(b)if, in the aggregate, the changes in the volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001513516_transunion_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001513516_transunion_prospectus_summary.txt
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@@ -0,0 +1 @@
+the related notes appearing elsewhere in this prospectus before deciding whether to purchase notes. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from any results discussed in the forward-looking statements as a result of certain factors, including those set forth under Risk Factors and Forward-Looking Statements. Overview We are a leading global provider of information and risk management solutions. We provide these solutions to businesses across multiple industries and to individual consumers. Our technology and services enable businesses to make more timely and informed credit granting, risk management, underwriting, fraud protection and customer acquisition decisions by delivering high quality data, integrated with analytics and decisioning capabilities. Our interactive website provides consumers with real-time access to their personal credit information and analytical tools that help them understand and proactively manage their personal finances. Over a million unique consumers visit our website each month. We have operations in the United States, Africa, Canada, Latin America, Asia Pacific and India and provide services in 33 countries. Since our founding in 1968, we have built a diversified and stable customer base in multiple industries, including financial services, insurance, healthcare, automotive, retail and communications. Businesses use our data for their daily risk-management processes. Consumers use our data to help them understand their credit profile and protect themselves against identity theft. We obtain financial, credit, identity, bankruptcy, lien, judgment, insurance claims, automotive and other relevant information from thousands of sources, including credit-granting institutions, private databases and public records depositories, much of which is provided to us at little or no cost. We refine and enhance this data to create proprietary databases, processing approximately two billion updates monthly in the United States. We combine our data with our analytics and decisioning technology to deliver additional value to our customers. Our analytics, such as predictive modeling and scoring, customer segmentation, benchmarking and forecasting, enable businesses and consumers to efficiently monitor and manage risk. Our decisioning technology, which is delivered on a software-as-a-service platform, enables businesses to interpret data and scores and apply their specific qualifying criteria to make real-time decisions at the point of interaction with their customers. Collectively, our data, analytics and decisioning technology allow businesses to more effectively identify and acquire new customers, manage risk associated with existing customers, generate cross-selling opportunities and reduce loss from fraud and identity theft. We have a global customer base that includes many of the largest companies in each of the primary industries we serve. For example, in the United States, we contract with eight of the ten largest banks, all of the major credit card issuers, nine of the ten largest property and casualty insurance carriers and we provide services to thousands of healthcare providers. In addition, we provide subscription-based interactive services to a growing base of over one million consumers. We manage our business through three operating segments: U.S. Information Services ( USIS ), International and Interactive. USIS, which represented approximately 64% of our revenue in 2012, and 63% of our revenue in the six months ended June 30, 2013, provides consumer reports, credit scores, verification services, analytical services, revenue management and decisioning technology to businesses in the United States. USIS offers these services to customers in the financial services, insurance, healthcare and other industries, and delivers them through both direct and indirect channels. Table of Contents Table of Registrant Guarantors Exact Name of Registrant Guarantors as Specified in Its Charter State or Other Jurisdiction of Incorporation or Organization I.R.S. Employer Identification Number Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant Guarantor s Principal Executive Offices Diversified Data Development Corporation. California 95-2902153 555 West Adams Street Chicago, IL 60661 (312) 985-2000 TransUnion Corp. Delaware 74-3135689 555 West Adams Street Chicago, IL 60661 (312) 985-2000 TransUnion Healthcare LLC Delaware 27-1491512 555 West Adams Street Chicago, IL 60661 (312) 985-2000 TransUnion Interactive, Inc. Delaware 13-4117314 555 West Adams Street Chicago, IL 60661 (312) 985-2000 TransUnion Rental Screening Solutions, Inc.. Delaware 52-2139271 555 West Adams Street Chicago, IL 60661 (312) 985-2000 TransUnion TeleData LLC Oregon 20-5618633 555 West Adams Street Chicago, IL 60661 (312) 985-2000 Visionary Systems, Inc.. Georgia 58-2255788 555 West Adams Street Chicago, IL 60661 (312) 985-2000 Table of Contents Under the terms of the indenture relating to the notes, the Issuers have agreed that, whether or not we are required to do so by the rules and regulations of the SEC, for so long as any of the notes remain outstanding, we will furnish to the trustee and holders of the notes the information specified in the indenture. See Description of the Notes. Forward-Looking Statements This prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statements made in this prospectus that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plans and strategies. These statements often include words such as anticipate, expect, suggest, plan, believe, intend, continue, estimate, target, project, forecast, should, could, would, may, will and other similar expressions. We base these forward-looking statements on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at the time such statements were made. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements. Factors that may materially affect such forward-looking statements include: macroeconomic and industry trends and adverse developments in the debt, consumer credit and financial services markets; our ability to maintain the security and integrity of our data; our ability to deliver services timely without interruption; our ability to maintain our access to data sources; government regulation and changes in the regulatory environment; litigation or regulatory proceedings; our ability to effectively develop and maintain strategic alliances and joint ventures; our ability to make acquisitions and integrate the operations of other businesses; our ability to timely develop new services; our ability to manage and expand our operations and keep up with rapidly changing technologies; our ability to manage expansion of our business into international markets; economic and political stability in international markets where we operate; our ability to effectively manage our costs; our ability to provide competitive services and prices; our ability to make timely payments of principal and interest on our indebtedness; our ability to satisfy covenants in the agreements governing our indebtedness; our ability to maintain our liquidity; fluctuations in exchange rates; changes in federal, state, local and foreign tax laws; Table of Contents International, which represented approximately 20% of our revenue in 2012, and 20% of our revenue in the six months ended June 30, 2013, provides services similar to our USIS and Interactive segments, and provides services in 32 countries outside the United States. Our International segment also provides automotive information and commercial data to our customers in select geographies. Interactive, which represented approximately 16% of our revenue in 2012, and 17% of our revenue in the six months ended June 30, 2013, provides services to consumers that help them understand and proactively manage their personal finances and protect them from identity theft. We sell our subscription-based interactive services primarily through our website, www.transunion.com. Our Industry Evolution to mission critical role. Credit bureaus were formed in the nineteenth century to help provide better credit information to local and regional lenders so they could make more informed credit decisions. As consumer lending expanded, credit bureaus became an integral part of the lending process and now play a critical role in the intermediation between lenders and borrowers. Credit bureaus developed a variety of methods to collect, maintain and analyze information concerning the ability of consumers and businesses to meet their obligations. Consumers and commercial lenders have increasingly used these services to make more informed credit decisions. As a result, credit bureaus have positioned themselves as mission critical partners to financial services institutions around the world. Three major providers with sustainable competitive advantage. As financial services institutions grew in scale and geographic scope, credit bureaus extended their reach by coordinating and forming strategic alliances with other credit reporting providers to share data across large territories through a hub and spoke system. Three credit bureaus have since consolidated into large, international organizations that can provide a wide range of data services and analytical applications to their larger and increasingly demanding financial services customers. As a result of this consolidation, TransUnion, Equifax and Experian have emerged as the global leaders in the industry. The largest U.S. customers of these global credit bureaus typically use the services of all three providers to validate consistency and ensure reliability. Development of the business information service providers. Over the past decade, credit bureaus have devoted significant resources to enhance the quality of their data sets by developing a variety of proprietary information databases. Credit bureaus have evolved from being collectors and sellers of credit information to providers of more advanced information services. Given the increased consumer demand for monitoring their own credit, the credit bureaus have also begun to market and sell these services directly to consumers. The development of these more advanced services has enabled credit bureaus to diversify their revenue base, accelerate growth and evolve into business information service providers. Market Opportunity We believe several important trends in the global macroeconomic environment, as well as within the key industries we serve, are driving development of the market for information and risk management solutions. Large and Growing Market for Data and Analytics. We believe that the business information services market is large and growing. We believe that the demand for targeted data and sophisticated analytical tools will continue to grow meaningfully as businesses seek real-time access to more granular data in order to better understand their customers. Table of Contents The information in this prospectus is not complete and may be changed. We may not offer or sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, SEPTEMBER 18, 2013 Prospectus Trans Union LLC TransUnion Financing Corporation 11.375% Senior Notes due 2018, Series B The 11.375% Senior Notes due 2018, Series B were issued by Trans Union LLC and TransUnion Financing Corporation, which we refer to together as the Issuers, in exchange for the 11.375% Senior Notes due 2018 originally issued by the Issuers on June 15, 2010. The 11.375% Senior Notes due 2018, Series B are referred to herein as the 11.375% notes, or the notes, unless the context otherwise requires. The notes bear interest at a rate of 11.375% per annum and mature on June 15, 2018. We are registering the notes under the Securities Act of 1933 for market-making transactions, as described below. The notes will mature on June 15, 2018. The Issuers have the option to redeem all or a portion of the notes at any time on or after June 15, 2014 at the redemption prices set forth in this prospectus plus accrued and unpaid interest. The Issuers also have an option to redeem all or a portion of the notes at any time before June 15, 2014, at a redemption price equal to 100% of the aggregate principal amount of the notes to be redeemed plus a make-whole premium and accrued and unpaid interest. The notes are the Issuers senior unsecured obligations and rank equal in right of payment with all of the Issuers existing and future senior debt. The Issuers parent company, TransUnion Corp., and each of TransUnion Corp. s direct and indirect subsidiaries that guarantee Trans Union LLC s credit facilities have unconditionally guaranteed the notes on a senior unsecured basis with guarantees that rank pari passu in right of payment with all existing and future senior indebtedness of each entity. The notes and the guarantees are effectively subordinated to the existing and future secured indebtedness of the Issuers and guarantors to the extent of the value of the collateral securing such indebtedness. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. There is no established trading market for the notes offered hereby. We do not intend to list the notes on any securities exchange or seek approval for quotation through any automated trading system. See Risk Factors beginning on page 15 for a discussion of certain risks that you should consider before investing in the notes. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and other affiliates of The Goldman Sachs Group, Inc. in connection with offers and sales of the notes related to market-making transactions in the notes effected from time to time. Such affiliates of The Goldman Sachs Group, Inc. may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. GOLDMAN, SACHS & CO. The date of this prospectus is , 2013 Table of Contents our ability to protect our intellectual property; our ability to retain or renew existing agreements with long-term customers; our ability to access the capital markets; further consolidation in our end customer markets; reliance on key management personnel; and
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001515116_tango_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001515116_tango_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. In this Prospectus, the terms Tango Supplies, Inc. , Tango, Company, we, us, and our refer to TANGO SUPPLIES, INC. Overview We were incorporated in the State of Nevada on August 27, 2010 under the name of Tango Supplies, Inc. Tango Supplies, Inc. is a development stage company with a limited history of development stage operations. . Where You Can Find Us Our principal executive office is located at TANGO SUPPLIES, INC. 1890 South 3850 West, Suite C, Utah 84104 and our telephone number is (888) 511-9018. Our internet address is: http://www.tangosupplyinc.net GENERAL INTRODUCTION Tango Supplies Inc. is presently developing for sale one liquid oxygen drink, named Aerobia, in the Salt Lake City, Utah area. The liquid oxygen drink will be manufactured by an unaffiliated outside provider Liquid Assets, Inc. and the Company has not distributed the product to anyone. Since it was incorporated, the Company has created a formula for its product with Liquid Assets, Inc., developed marketing materials for its one product and has attempted to find clients for its one product once it starts operations. Since its inception, on August 27, 2010 through March 31, 2013 Tango has incurred losses of $25,023 . Tango Supplies, Inc. has not commenced its major operations of having its product manufactured, and the Company has not distributed the product to anyone. The Company will not have its product manufactured until the Company has sold the product to an end user. Tango Supplies, Inc. is considered a development stage company because it has not commenced its major operations. In addition the Company has not achieved any revenue in connection with its business to date. As a result, we are a startup company, which means that we have no operating history or revenue, and are at a competitive disadvantage We expect to continue to incur losses for at least the next 12 months. We do not expect to generate revenue that is sufficient to cover our expenses, and we do not have sufficient cash and cash equivalents to execute our plan of operations for at least the next twelve months. We will need to obtain additional financing to conduct our day-to-day operations, and to fully execute our business plan. We plan to raise the capital necessary to fund our business through the sale of equity securities, debt instruments or private financing. (See "Plan of Operation") The Company s estimated monthly burn rate projected during the first fiscal year, without due consideration for adjustment is $30,000. This includes a three month burn, in cash, of $7,500 (at $2,500 per month) considering the Company encounters a bad quarter during its first year in business beginning with the first current due date and ending with the cash zero date. At March 31, 2013, the Company had bank overdrafts of $10. Our independent auditors have added an explanatory paragraph to their report of our audited financial statements for the year ended March 31, 2013 , stating that our accumulated deficit of $25,023 , lack of revenues and dependence on our ability to raise additional capital to continue our business, raise substantial doubt about our ability to continue as a going concern. Our financial statements and their explanatory notes included as part of this prospectus do not include any adjustments that might result from the outcome of this uncertainty. They are no guarantee that we will be able to raise funds through equity security sales, debt instruments, and private financing. Currently, we have no agreements in place to raise money through debt instruments or private financing. If we fail to obtain additional financing, either through an offering of our securities or by obtaining loans, we may be forced to cease our planned business operations altogether. BUSINESS DEVELOPMENT The Company was incorporated on August 27, 2010. The Company has had limited development stage operations from incorporation (August 27, 2010) to March 31, 2013 . Initial Sales Strategy We have established a one-prong sales approach; our approach utilizes direct sales through Gerald Ricks (also referred hereinafter as Mr. Ricks ). Our direct sales are being conducted by Mr. Ricks, who will market the product locally in the Salt Lake City, Utah area to retail chain stores. His current marketing strategy will consist of various Point of Sale material including posters and flyers developed by Mr. Ricks in the past several months. We intend to derive income from these sales and our goal is to establish brand recognition. Amendment No. 3 to FORM S-1 Subsequent Sales Strategy Tango Supplies, Inc. will commence the marketing of the one liquid oxygen drink, named Aerobia, for sale to the general public. The Company is presently developing its marketing program to sell the liquid oxygen drinks to the general public. The Company will have its one product manufactured by Liquid Assets, Inc. The Company, however, does not at the present time have any contractual agreements and/or contractual arrangement with Liquid Assets, Inc. to produce its one product. Additionally, the Company is not offering the product to anyone at this time. Tango Supplies, Inc. is considered a development stage company because it has not commenced its major operations. In addition the Company has not achieved any revenue in connection with its business to date. As a result we are a startup company, which means that we have no operating history or revenue and are, therefore, at a competitive disadvantage. We have no operating history and expect to incur losses for the foreseeable future. Should we continue to incur losses for a significant amount of time, the value of your investment in the common shares could be affected downward, and you could even lose your entire investment. We have not yet received any revenues from our development stage operations, nor have we otherwise engaged in any business operations. Tango Supplies, Inc. is a development stage company and in the absence of revenues and operations the Independent Auditor s Report dated August 9, 2013 , cites a going concern issue. The going concern statement opinion issued by the independent auditors is due to the Company s lack of operations and working capital. The Company will need to raise capital which concerned the independent auditors because there is insufficient cash for operations for the next twelve months. We will have to seek other sources of capital. We established the minimum amount of $75,000 that the company will need to raise through the selling of equity securities, debt instruments or private financing so that operations could start in order to generate some type of revenue. Presently no other sources have been identified and it is unknown if any other sources will be identified. There is no assurance that the company will be able to obtain any bank loans or private financing. The Company does not expect to run out of money, as Mr. Ricks has agreed to fund the Company, through an oral agreement, until such time as the Company raises $75,000. Mr. Ricks, however, is under no legal obligation and/or duty to do so. Additionally, although there is an oral agreement between the Company and Mr. Ricks to fund the Company until such time as the Company raises $75,000, Mr. Ricks has not agreed to fund any specific amount to the Company. DESCRIPTION OF PROPERTY We use a corporate office located at 1844 South 3850 West, Suite C, Salt Lake City, Utah 84104. This facility is being provided to the company free of charge. There are currently no proposed programs for renovation, improvement or development of the facility currently in use. CORPORATE INFORMATION Our principal executive office is located at TANGO SUPPLIES, INC. 1890 South 3850 West, Suite C, Utah 84104 and our telephone number is (888) 511-9018. INTERNET ADDRESS Our Internet address is http://www.tangosupplyinc.net which is currently under development/construction. We need additional funding to finish our website. The Company, however, has registered this domain. Over the next twelve months, Tango Supplies, Inc. plans to build out and establish its reputation and network of clients and advisors in the liquid oxygen drink business for sale to the general public. The Company aims to form long term working relationships with companies looking to sell its liquid oxygen drink, Aerobia, to the general public. Our liquid oxygen drink will include Vitamin B12, aloe vera juice and CoQ10 combined in an anaerocidal oxygen mixture. Mr. Gerald Ricks is the Chief Executive Officer, President, (Principal Executive Officer) and Director. Currently the Company has no employees; however as it grows, it plans to employ additional employees as needed. PRINCIPAL OPERATIONS, PRODUCTS AND SERVICES OF THE COMPANY Tango Supplies, Inc. (also hereinafter referred to as Tango and the Company ) was incorporated in the State of Nevada on August 27, 2010. Tango Supplies, Inc. is presently developing a liquid oxygen drink name Aerobia. Tango Supplies, Inc. is a development stage company. Tango Supplies, Inc. has no history of development stage operations. We presently do not have the funding to execute our business plan. Achievement of our business objective is basically dependent upon the judgment, skill and knowledge of our management. Mr. Ricks, currently our sole executive officer and director. There can be no assurance that a suitable replacement could be found for any of our officers upon their retirement, resignation, inability to act on our behalf, or death. RISK FACTORS The Company's financial condition, business, operation and prospects involve a high degree of risk. You are urged to carefully read and consider the risks and uncertainties described on page 6 of this prospectus entitled Risk Factors as well as the other information in this report before deciding to invest in our Company. All materials risks are discussed in the Risk Factors section of this prospectus. If any of the risks described on Page 6 of this Prospectus entitled Risk Factors are realized, our business, operating results and financial condition could be harmed and the value of our stock could go down. This means that our stockholders could lose all or a part of their investment. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price per Security Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, $0.001 par value (1) 8,000,000 $ 0.001 (2) $ 8,000 $ 0.93 TOTAL 8,000,000 $ 0.001 (2) $ 8,000 $ 0.93 (1) Estimated solely for purposes of calculating the registration fee under Rule 457( a ) promulgated under the Securities Act of 1933, as amended. Includes stock to be sold by the selling stockholder. (2) The shares of common stock being registered hereunder are being registered for resale by a certain selling stockholder named in the prospectus. In the event of a stock split, stock dividend, or similar transaction involving the common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001515732_juniper_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001515732_juniper_prospectus_summary.txt
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@@ -0,0 +1 @@
+This summary highlights information about Momentive Performance Materials Inc. and the Notes contained elsewhere in this prospectus. This summary may not contain all the information that may be important to you. You should carefully read the entire prospectus before making an investment decision, especially the information presented under the heading Risk Factors. In this prospectus, except as otherwise indicated herein, or as the context may otherwise require, all references to: (i) Momentive, the Company, we, us and our refer to Momentive Performance Materials Inc. and its subsidiaries and (ii) the MPM Group refers to Momentive Performance Materials Holdings Inc. and its subsidiaries. Company overview Momentive Performance Materials Inc. was formed through the acquisition of GE Advanced Materials on December 3, 2006. We believe we are one of the world s largest producers of silicones and silicone derivatives and a global leader in the development and manufacture of products derived from quartz and specialty ceramics. For the twelve months ended December 31, 2012, silicones and quartz represented approximately 91% and 9% of our revenue, respectively. Silicones are a multi-functional family of materials used in a wide variety of products, and serve as a critical ingredient in many construction, transportation, healthcare, personal care, electronic, consumer and agricultural uses. Silicones are generally used as an additive to a wide variety of end products in order to provide or enhance certain of their attributes, such as resistance (heat, ultraviolet light and chemical), lubrication, adhesion or viscosity. Some of the most well-known end-use product applications include bath and shower caulk, pressure-sensitive adhesive labels, foam products, cosmetics and tires. Due to the versatility and high-performance characteristics of silicones, they are increasingly being used as a substitute for other materials. Our Quartz business manufactures quartz, specialty ceramics and crystal products for use in a number of high-technology industries, which typically require products made to precise specifications. The cost of our products typically represents a small percentage of the overall cost of our customers products. On October 1, 2010, our parent, Momentive Performance Materials Holdings Inc. ( MPM Holdings ) and Momentive Specialty Chemicals Holdings LLC (formerly known as Hexion LLC and referred to herein as MSC Holdings ), the direct parent company of Momentive Specialty Chemicals Inc. (formerly known as Hexion Specialty Chemicals, Inc. and referred to herein as MSC ), became subsidiaries of a newly formed holding company, Momentive Performance Materials Holdings LLC ( Momentive Holdings ). We refer to this event as the Momentive Combination. As a result of the Momentive Combination, Momentive Holdings became the ultimate parent entity of Momentive and MSC. Momentive Holdings is controlled by investment funds (the Apollo Funds ) managed by affiliates of Apollo Management Holdings, L.P. (together with Apollo Global Management, LLC and its subsidiaries, Apollo ). Apollo may also be referred to as the Company s owner. We believe that our scale and global reach provide significant efficiencies in our fixed and variable cost structure and that our breadth of related products provides significant operational, technological and commercial advantages. Our manufacturing capacity at our internal sites and our joint venture in China is sufficient to produce the substantial majority of one of our key intermediates, siloxane, which facilitates a low-cost operating structure and security of supply. We are one of two producers in the silicones market with global siloxane production capacity. As of December 31, 2012, we had 22 production sites strategically located around the world, which allows us to produce the substantial majority of our key products locally in the Americas, Europe and Asia. Through this worldwide network of production facilities, we serve more than 5,500 customers between our Silicones and Quartz businesses in over 100 countries. Our customers include leading companies in their respective industries, such as Procter & Gamble, 3M, Goodyear, Unilever, Saint Gobain, Motorola, L Oreal, BASF, The Home Depot and Lowe s. Table of Contents EXHIBIT INDEX Exhibit Number Description of Document 2.1 Stock and Asset Purchase Agreement, dated as of September 14, 2006, by and between General Electric Company and Momentive Performance Materials Holdings Inc. (formerly known as Nautilus Holdings Acquisition Corp.) (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 2.2 Amendment to Stock and Asset Purchase Agreement, dated as of December 3, 2006, by and between General Electric Company and Momentive Performance Materials Holdings Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.1 Certificate of Incorporation, as amended, of Momentive Performance Materials Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.2 Amended and Restated By-laws of Momentive Performance Materials Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.3 Certificate of Incorporation, as amended, of Momentive Performance Materials Worldwide Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.4 Amended and Restated By-laws of Momentive Performance Materials Worldwide Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.5 Certificate of Incorporation, as amended, of Momentive Performance Materials China SPV Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.6 Amended and Restated By-laws of Momentive Performance Materials China SPV Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.7 Certificate of Incorporation, as amended, of Momentive Performance Materials South America Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.8 Amended and Restated By-laws of Momentive Performance Materials South America Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.9 Amended and Restated Operating Agreement of MPM Silicones, LLC (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.10 Articles of Organization, as amended, of MPM Silicones, LLC (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.11 Certificate of Incorporation, as amended, of Momentive Performance Materials Quartz, Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.12 Amended and Restated By-laws of Momentive Performance Materials Quartz, Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.13 Certificate of Incorporation, as amended, of Momentive Performance Materials USA Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.14 Amended and Restated By-laws of Momentive Performance Materials USA Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.15 Operating Agreement of Juniper Bond Holdings I LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) Table of Contents SCHEDULE A Guarantor State or Other Jurisdiction of Incorporation or Organization Address of Registrants Principal Executive Offices I.R.S. Employer Identification Number Momentive Performance Materials Worldwide Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5748357 Momentive Performance Materials USA Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5748388 Momentive Performance Materials China SPV Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5748469 Momentive Performance Materials South America Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5834895 MPM Silicones, LLC New York 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 22-3775481 Momentive Performance Materials Quartz, Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 34-1839929 Juniper Bond Holdings I LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589631 Juniper Bond Holdings II LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589692 Juniper Bond Holdings III LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589765 Juniper Bond Holdings IV LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589836 Table of Contents We have not authorized anyone to give you any information or to make any representations about us or the transactions we discuss in this prospectus other than those contained in this prospectus. If you are given any information or representations about these matters that is not discussed in this prospectus, you must not rely on that information. This prospectus is not an offer to sell or a solicitation of an offer to buy securities anywhere or to anyone where or to whom we are not permitted to offer or sell securities under applicable law. The delivery of this prospectus does not, under any circumstances, mean that there has not been a change in our affairs since the date of this prospectus. Subject to our obligation to amend or supplement this prospectus as required by law and the rules of the Securities and Exchange Commission, or the SEC, the information contained in this prospectus is correct only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of these securities. We will update this prospectus to the extent required by law. We are offering to sell the Notes only in jurisdictions where offers and sales are permitted. Table of Contents We believe we have created a value-added, technical service-oriented business model that enables us to target and participate in high-margin and high-growth specialty markets. These specialty markets account for the majority of our revenues and continue to be a growing part of our business. Revenue and Adjusted EBITDA (as defined in the section entitled Covenant Compliance elsewhere herein) for the twelve months ended December 31, 2012 were $2,357 million and $228 million, respectively. Net loss for the twelve months ended December 31, 2012 was $365 million. Our Strengths Our company has the following competitive strengths: Leading Global Silicones Producer. We believe we are one of the world s largest producers of silicones and silicone derivatives, with leading positions in various product lines and geographic areas. We believe our scale, global reach and breadth of product offerings provide us with significant advantages over many of our competitors by allowing us to serve global customers with precise specifications, particularly those expanding production in developing nations. Attractive Industry Growth Profile. The broad molecular characteristics of silicones continually lead to new uses and applications, which have led to worldwide industry growth in excess of GDP over the past 20 years. Drivers of growth include end-market growth and increased market penetration, with silicones increasingly being used as a value-added substitute for traditional materials or as a functional additive, which yields new properties for our customers products. For instance, silicones act as the conditioning ingredient in 2-in-1 shampoo. Broad-Based Diversification. Industry Diversification. Our Silicones business has a diversified revenue base across a variety of end-markets, reducing our vulnerability to industry trends. Furthermore, our products are often used in niche applications that represent a small portion of our customers material costs. Our leading end-markets are building and construction, which consists of industrial and infrastructure construction and repair, urethane foam additives and a number of other specialty products. Customer Diversification. We have a diverse customer base of more than 5,500 customers between our Silicones and Quartz businesses and are well balanced across multiple geographies. In 2012, our top 20 customers accounted for less than 22% of our total revenues, and no single customer accounted for more than 3% of our total revenues. We have maintained long-standing relationships with many of our customers. Geographic Diversification. We have a global sales presence, with approximately 38%, 31% and 31% of our 2012 and 2011 revenues generated in the Americas, Europe and Asia, respectively. Global Infrastructure. We are a global company with significant manufacturing capacity in each of the Americas, Europe and Asia. We have 22 production facilities located around the world, R&D centers on three continents and sales to customers in over 100 countries. The Silicones business has three siloxane production facilities located in Waterford, New York, Ohta, Japan and Leverkusen, Germany, as well as a siloxane manufacturing joint venture in Jiande, China, and two silanes production facilities in Sistersville, West Virginia and Termoli, Italy. The Quartz production sites are located in Ohio, Geesthacht, Germany, Kozuki, Japan and Wuxi, China. Table of Contents Exhibit Number Description of Document 3.16 Certificate of Formation of Juniper Bond Holdings I LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.17 Operating Agreement of Juniper Bond Holdings II LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.18 Certificate of Formation of Juniper Bond Holdings II LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.19 Operating Agreement of Juniper Bond Holdings III LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.20 Certificate of Formation of Juniper Bond Holdings III LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.21 Operating Agreement of Juniper Bond Holdings IV LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.22 Certificate of Formation of Juniper Bond Holdings IV LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 4.1 Indenture by and between Momentive Performance Materials Inc., Momentive Performance Materials Holdings Inc., Momentive Performance Materials Worldwide Inc., Momentive Performance Materials USA Inc., Momentive Performance Materials China SPV Inc., Momentive Performance Materials South America Inc., GE Quartz, Inc., GE Silicones, LLC and Momentive Performance Materials Inc., dated as of December 4, 2006, with respect to $500,000,000 11 1/2% Senior Subordinated Notes Due 2016 (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 4.2 11 1/2% Senior Subordinated Notes Due 2016 (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 4.3 Supplemental Indenture among Juniper Bond Holdings I LLC, Juniper Bond Holdings II LLC, Juniper Bond Holdings III LLC, Juniper Bond Holdings IV LLC and Wells Fargo Bank, N.A., dated as of December 20, 2007, with respect to the $500,000,000 11 1/2% Senior Subordinated Notes due 2016 (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 4.4 Agreement of registration, appointment and acceptance, effective as of June 8, 2009, by and among Momentive Performance Materials Inc., Wells Fargo Bank, N.A. and The Bank of New York Mellon Trust Company, N.A. (filed as exhibit 4.1 to our Form 8-K, filed on June 12, 2009) 4.5 Indenture, dated as of November 5, 2010, by and among Momentive Performance Materials Inc., the note guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent, including forms of the 9% Second-Priority Springing Lien Notes due 2021 (U.S. Dollar Denominated) and 9 1/2% Second-Priority Springing Lien Notes due 2021 (Euro Denominated) (filed as exhibit 4.1 to our Form 8-K, filed on November 12, 2010) 4.6 Indenture, dated as of May 25, 2012, by and among Momentive Performance Materials Inc., the Note Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (filed as exhibit 4.1 to our Form 8-K, filed on June 1, 2012) Table of Contents The information in this preliminary prospectus is not complete and may be changed. The selling security holders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated May 7, 2013 PROSPECTUS Momentive Performance Materials Inc. $124,323,000 11 1/2% Senior Subordinated Notes due 2016 This prospectus covers resales by holders of the 11 1/2% Senior Subordinated Notes due 2016 issued by Momentive Performance Materials Inc. ( Momentive ) on December 4, 2006, which we refer to herein as the Notes. The Notes mature on December 1, 2016. Interest on the Notes is payable in cash at a rate of 11 1/2% per annum, from the issue date or from the most recent date to which interest has been paid or provided for, payable semiannually to holders of record at the close of business on May 15 or November 15 immediately preceding the interest payment date on June 1 and December 1 of each year commencing June 1, 2007. Momentive may redeem some or all of the Notes, at the redemption prices set forth in this prospectus. See Description of Notes Optional Redemption. If we experience certain kinds of changes in control, we must offer to purchase the Notes. The Notes are subordinated to all our existing and future senior debt, including the 8.875% First-Priority Senior Secured Notes due 2020, the 10% Senior Secured Notes due 2020, the Second-Priority Springing Lien Notes due 2021 (together, the Senior Notes ), the ABL Facility (as defined herein) and the Cash Flow Facility (as defined herein), rank equally with all our existing and future senior subordinated debt and rank senior to all our existing and future subordinated debt. The Notes are guaranteed on an unsecured senior subordinated basis by each of Momentive s existing U.S. subsidiaries that is a guarantor under its Cash Flow Facility and each of its future U.S. subsidiaries that guarantee any debt of the Company or the Note Guarantors (the Note Guarantors ). The majority of our business in conducted through non-U.S. subsidiaries that are not guarantors of the Notes. If the Company fails to make payments on the Notes, the Note Guarantors must make them instead (the Note Guarantees ). We have not applied, and do not intend to apply, for listing of the Notes on any national securities exchange or automated quotation system. The selling security holders may sell the Notes covered by this prospectus in one or more transactions, directly to purchasers or through underwriters, brokers or dealers or agents, in public or private transactions, at fixed prices, prevailing market prices at the times of sale, prices related to the prevailing market prices, varying prices determined at the times of sale or negotiated prices. See Plan of Distribution. Momentive will not receive any proceeds from the resale of the Notes hereunder. See Risk Factors beginning on page 13 of this prospectus for a discussion of certain risks that you should consider before investing in the Notes. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2013. Table of Contents We use our global platform to deliver products to companies efficiently on a worldwide basis. Many of our customers are expanding internationally to serve developing areas in Asia, Eastern Europe, Latin America, India and Russia. Maintaining close proximity to our international customers allows us to serve them more quickly and efficiently and thus build strong relationships. Attractive Intermediate Position. We produce siloxane, the key intermediate required to manufacture silicones, in the United States, Germany and Japan, and source siloxane from a joint venture in China. This manufacturing capacity is sufficient to meet the substantial majority of our current requirements for siloxane. We also source a portion of our requirements through long-term and/or supply agreements. We believe this combination of siloxane supply, along with our ability to purchase siloxane from other suppliers when pricing is advantageous, reduces our overall cost structure and strengthens our overall competitiveness. Leading Fused Quartz and Specialty Ceramics Producer. We believe we are a global leader in the fused quartz and ceramics product markets in which we compete. In particular, we believe we are the largest manufacturer of quartz products for the semiconductor end-market and the second largest manufacturer of quartz products for fiber optics. Our leadership position and profitability are driven by several factors, including strong customer relationships and the precise quality and purity specifications of our products. Additionally, we believe we are a leader in several ceramic materials end-markets, including cosmetic additives. Risk Factors Despite our competitive strengths discussed above, investing in the Notes involves a number of risks, including: Our substantial debt could adversely affect our operations and prevent us from satisfying our obligations under our debt obligations. As of December 31, 2012, we had $3,116 million of consolidated outstanding indebtedness, including short-term borrowings, and, based on the consolidated indebtedness, our annualized cash interest expense is projected to be approximately $291 million based on interest rates at December 31, 2012 without giving effect to any subsequent borrowings under the previous revolving credit facility, the ABL Facility or the Cash Flow Facility, of which $288 million would represent cash interest expense on fixed-rate obligations; If global economic conditions weaken, it will continue to negatively impact our business, results of operations and financial condition; We may be unable to achieve the cost savings or synergies that we expect to achieve from our strategic initiatives, including the Momentive Combination, which would adversely affect our profitability and financial condition; Fluctuations in direct or indirect raw material costs could have an adverse impact on our business; and We depend on certain of our key executives and our ability to attract and retain qualified employees. For a discussion of the significant risks associated with our business, our industry and investing in the Notes, you should read the
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+This summary highlights information about Momentive Performance Materials Inc. and the Notes contained elsewhere in this prospectus. This summary may not contain all the information that may be important to you. You should carefully read the entire prospectus before making an investment decision, especially the information presented under the heading Risk Factors. In this prospectus, except as otherwise indicated herein, or as the context may otherwise require, all references to: (i) Momentive, the Company, we, us and our refer to Momentive Performance Materials Inc. and its subsidiaries and (ii) the MPM Group refers to Momentive Performance Materials Holdings Inc. and its subsidiaries. Company overview Momentive Performance Materials Inc. was formed through the acquisition of GE Advanced Materials on December 3, 2006. We believe we are one of the world s largest producers of silicones and silicone derivatives and a global leader in the development and manufacture of products derived from quartz and specialty ceramics. For the twelve months ended December 31, 2012, silicones and quartz represented approximately 91% and 9% of our revenue, respectively. Silicones are a multi-functional family of materials used in a wide variety of products, and serve as a critical ingredient in many construction, transportation, healthcare, personal care, electronic, consumer and agricultural uses. Silicones are generally used as an additive to a wide variety of end products in order to provide or enhance certain of their attributes, such as resistance (heat, ultraviolet light and chemical), lubrication, adhesion or viscosity. Some of the most well-known end-use product applications include bath and shower caulk, pressure-sensitive adhesive labels, foam products, cosmetics and tires. Due to the versatility and high-performance characteristics of silicones, they are increasingly being used as a substitute for other materials. Our Quartz business manufactures quartz, specialty ceramics and crystal products for use in a number of high-technology industries, which typically require products made to precise specifications. The cost of our products typically represents a small percentage of the overall cost of our customers products. On October 1, 2010, our parent, Momentive Performance Materials Holdings Inc. ( MPM Holdings ) and Momentive Specialty Chemicals Holdings LLC (formerly known as Hexion LLC and referred to herein as MSC Holdings ), the direct parent company of Momentive Specialty Chemicals Inc. (formerly known as Hexion Specialty Chemicals, Inc. and referred to herein as MSC ), became subsidiaries of a newly formed holding company, Momentive Performance Materials Holdings LLC ( Momentive Holdings ). We refer to this event as the Momentive Combination. As a result of the Momentive Combination, Momentive Holdings became the ultimate parent entity of Momentive and MSC. Momentive Holdings is controlled by investment funds (the Apollo Funds ) managed by affiliates of Apollo Management Holdings, L.P. (together with Apollo Global Management, LLC and its subsidiaries, Apollo ). Apollo may also be referred to as the Company s owner. We believe that our scale and global reach provide significant efficiencies in our fixed and variable cost structure and that our breadth of related products provides significant operational, technological and commercial advantages. Our manufacturing capacity at our internal sites and our joint venture in China is sufficient to produce the substantial majority of one of our key intermediates, siloxane, which facilitates a low-cost operating structure and security of supply. We are one of two producers in the silicones market with global siloxane production capacity. As of December 31, 2012, we had 22 production sites strategically located around the world, which allows us to produce the substantial majority of our key products locally in the Americas, Europe and Asia. Through this worldwide network of production facilities, we serve more than 5,500 customers between our Silicones and Quartz businesses in over 100 countries. Our customers include leading companies in their respective industries, such as Procter & Gamble, 3M, Goodyear, Unilever, Saint Gobain, Motorola, L Oreal, BASF, The Home Depot and Lowe s. Table of Contents EXHIBIT INDEX Exhibit Number Description of Document 2.1 Stock and Asset Purchase Agreement, dated as of September 14, 2006, by and between General Electric Company and Momentive Performance Materials Holdings Inc. (formerly known as Nautilus Holdings Acquisition Corp.) (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 2.2 Amendment to Stock and Asset Purchase Agreement, dated as of December 3, 2006, by and between General Electric Company and Momentive Performance Materials Holdings Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.1 Certificate of Incorporation, as amended, of Momentive Performance Materials Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.2 Amended and Restated By-laws of Momentive Performance Materials Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.3 Certificate of Incorporation, as amended, of Momentive Performance Materials Worldwide Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.4 Amended and Restated By-laws of Momentive Performance Materials Worldwide Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.5 Certificate of Incorporation, as amended, of Momentive Performance Materials China SPV Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.6 Amended and Restated By-laws of Momentive Performance Materials China SPV Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.7 Certificate of Incorporation, as amended, of Momentive Performance Materials South America Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.8 Amended and Restated By-laws of Momentive Performance Materials South America Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.9 Amended and Restated Operating Agreement of MPM Silicones, LLC (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.10 Articles of Organization, as amended, of MPM Silicones, LLC (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.11 Certificate of Incorporation, as amended, of Momentive Performance Materials Quartz, Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.12 Amended and Restated By-laws of Momentive Performance Materials Quartz, Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.13 Certificate of Incorporation, as amended, of Momentive Performance Materials USA Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.14 Amended and Restated By-laws of Momentive Performance Materials USA Inc. (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 3.15 Operating Agreement of Juniper Bond Holdings I LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) Table of Contents SCHEDULE A Guarantor State or Other Jurisdiction of Incorporation or Organization Address of Registrants Principal Executive Offices I.R.S. Employer Identification Number Momentive Performance Materials Worldwide Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5748357 Momentive Performance Materials USA Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5748388 Momentive Performance Materials China SPV Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5748469 Momentive Performance Materials South America Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 20-5834895 MPM Silicones, LLC New York 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 22-3775481 Momentive Performance Materials Quartz, Inc. Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 34-1839929 Juniper Bond Holdings I LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589631 Juniper Bond Holdings II LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589692 Juniper Bond Holdings III LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589765 Juniper Bond Holdings IV LLC Delaware 260 Hudson River Road Waterford, NY 12188 (518) 237-3330 26-1589836 Table of Contents We have not authorized anyone to give you any information or to make any representations about us or the transactions we discuss in this prospectus other than those contained in this prospectus. If you are given any information or representations about these matters that is not discussed in this prospectus, you must not rely on that information. This prospectus is not an offer to sell or a solicitation of an offer to buy securities anywhere or to anyone where or to whom we are not permitted to offer or sell securities under applicable law. The delivery of this prospectus does not, under any circumstances, mean that there has not been a change in our affairs since the date of this prospectus. Subject to our obligation to amend or supplement this prospectus as required by law and the rules of the Securities and Exchange Commission, or the SEC, the information contained in this prospectus is correct only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of these securities. We will update this prospectus to the extent required by law. We are offering to sell the Notes only in jurisdictions where offers and sales are permitted. Table of Contents We believe we have created a value-added, technical service-oriented business model that enables us to target and participate in high-margin and high-growth specialty markets. These specialty markets account for the majority of our revenues and continue to be a growing part of our business. Revenue and Adjusted EBITDA (as defined in the section entitled Covenant Compliance elsewhere herein) for the twelve months ended December 31, 2012 were $2,357 million and $228 million, respectively. Net loss for the twelve months ended December 31, 2012 was $365 million. Our Strengths Our company has the following competitive strengths: Leading Global Silicones Producer. We believe we are one of the world s largest producers of silicones and silicone derivatives, with leading positions in various product lines and geographic areas. We believe our scale, global reach and breadth of product offerings provide us with significant advantages over many of our competitors by allowing us to serve global customers with precise specifications, particularly those expanding production in developing nations. Attractive Industry Growth Profile. The broad molecular characteristics of silicones continually lead to new uses and applications, which have led to worldwide industry growth in excess of GDP over the past 20 years. Drivers of growth include end-market growth and increased market penetration, with silicones increasingly being used as a value-added substitute for traditional materials or as a functional additive, which yields new properties for our customers products. For instance, silicones act as the conditioning ingredient in 2-in-1 shampoo. Broad-Based Diversification. Industry Diversification. Our Silicones business has a diversified revenue base across a variety of end-markets, reducing our vulnerability to industry trends. Furthermore, our products are often used in niche applications that represent a small portion of our customers material costs. Our leading end-markets are building and construction, which consists of industrial and infrastructure construction and repair, urethane foam additives and a number of other specialty products. Customer Diversification. We have a diverse customer base of more than 5,500 customers between our Silicones and Quartz businesses and are well balanced across multiple geographies. In 2012, our top 20 customers accounted for less than 22% of our total revenues, and no single customer accounted for more than 3% of our total revenues. We have maintained long-standing relationships with many of our customers. Geographic Diversification. We have a global sales presence, with approximately 38%, 31% and 31% of our 2012 and 2011 revenues generated in the Americas, Europe and Asia, respectively. Global Infrastructure. We are a global company with significant manufacturing capacity in each of the Americas, Europe and Asia. We have 22 production facilities located around the world, R&D centers on three continents and sales to customers in over 100 countries. The Silicones business has three siloxane production facilities located in Waterford, New York, Ohta, Japan and Leverkusen, Germany, as well as a siloxane manufacturing joint venture in Jiande, China, and two silanes production facilities in Sistersville, West Virginia and Termoli, Italy. The Quartz production sites are located in Ohio, Geesthacht, Germany, Kozuki, Japan and Wuxi, China. Table of Contents Exhibit Number Description of Document 3.16 Certificate of Formation of Juniper Bond Holdings I LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.17 Operating Agreement of Juniper Bond Holdings II LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.18 Certificate of Formation of Juniper Bond Holdings II LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.19 Operating Agreement of Juniper Bond Holdings III LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.20 Certificate of Formation of Juniper Bond Holdings III LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.21 Operating Agreement of Juniper Bond Holdings IV LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 3.22 Certificate of Formation of Juniper Bond Holdings IV LLC (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 4.1 Indenture by and between Momentive Performance Materials Inc., Momentive Performance Materials Holdings Inc., Momentive Performance Materials Worldwide Inc., Momentive Performance Materials USA Inc., Momentive Performance Materials China SPV Inc., Momentive Performance Materials South America Inc., GE Quartz, Inc., GE Silicones, LLC and Momentive Performance Materials Inc., dated as of December 4, 2006, with respect to $500,000,000 11 1/2% Senior Subordinated Notes Due 2016 (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 4.2 11 1/2% Senior Subordinated Notes Due 2016 (filed as the exhibit of the same number to our Form S-4 Registration Statement, filed on September 14, 2007) 4.3 Supplemental Indenture among Juniper Bond Holdings I LLC, Juniper Bond Holdings II LLC, Juniper Bond Holdings III LLC, Juniper Bond Holdings IV LLC and Wells Fargo Bank, N.A., dated as of December 20, 2007, with respect to the $500,000,000 11 1/2% Senior Subordinated Notes due 2016 (filed as the exhibit of the same number to our Post-Effective Amendment No. 1 to Form S-4 Registration Statement, filed on January 28, 2008) 4.4 Agreement of registration, appointment and acceptance, effective as of June 8, 2009, by and among Momentive Performance Materials Inc., Wells Fargo Bank, N.A. and The Bank of New York Mellon Trust Company, N.A. (filed as exhibit 4.1 to our Form 8-K, filed on June 12, 2009) 4.5 Indenture, dated as of November 5, 2010, by and among Momentive Performance Materials Inc., the note guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent, including forms of the 9% Second-Priority Springing Lien Notes due 2021 (U.S. Dollar Denominated) and 9 1/2% Second-Priority Springing Lien Notes due 2021 (Euro Denominated) (filed as exhibit 4.1 to our Form 8-K, filed on November 12, 2010) 4.6 Indenture, dated as of May 25, 2012, by and among Momentive Performance Materials Inc., the Note Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (filed as exhibit 4.1 to our Form 8-K, filed on June 1, 2012) Table of Contents The information in this preliminary prospectus is not complete and may be changed. The selling security holders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated May 7, 2013 PROSPECTUS Momentive Performance Materials Inc. $124,323,000 11 1/2% Senior Subordinated Notes due 2016 This prospectus covers resales by holders of the 11 1/2% Senior Subordinated Notes due 2016 issued by Momentive Performance Materials Inc. ( Momentive ) on December 4, 2006, which we refer to herein as the Notes. The Notes mature on December 1, 2016. Interest on the Notes is payable in cash at a rate of 11 1/2% per annum, from the issue date or from the most recent date to which interest has been paid or provided for, payable semiannually to holders of record at the close of business on May 15 or November 15 immediately preceding the interest payment date on June 1 and December 1 of each year commencing June 1, 2007. Momentive may redeem some or all of the Notes, at the redemption prices set forth in this prospectus. See Description of Notes Optional Redemption. If we experience certain kinds of changes in control, we must offer to purchase the Notes. The Notes are subordinated to all our existing and future senior debt, including the 8.875% First-Priority Senior Secured Notes due 2020, the 10% Senior Secured Notes due 2020, the Second-Priority Springing Lien Notes due 2021 (together, the Senior Notes ), the ABL Facility (as defined herein) and the Cash Flow Facility (as defined herein), rank equally with all our existing and future senior subordinated debt and rank senior to all our existing and future subordinated debt. The Notes are guaranteed on an unsecured senior subordinated basis by each of Momentive s existing U.S. subsidiaries that is a guarantor under its Cash Flow Facility and each of its future U.S. subsidiaries that guarantee any debt of the Company or the Note Guarantors (the Note Guarantors ). The majority of our business in conducted through non-U.S. subsidiaries that are not guarantors of the Notes. If the Company fails to make payments on the Notes, the Note Guarantors must make them instead (the Note Guarantees ). We have not applied, and do not intend to apply, for listing of the Notes on any national securities exchange or automated quotation system. The selling security holders may sell the Notes covered by this prospectus in one or more transactions, directly to purchasers or through underwriters, brokers or dealers or agents, in public or private transactions, at fixed prices, prevailing market prices at the times of sale, prices related to the prevailing market prices, varying prices determined at the times of sale or negotiated prices. See Plan of Distribution. Momentive will not receive any proceeds from the resale of the Notes hereunder. See Risk Factors beginning on page 13 of this prospectus for a discussion of certain risks that you should consider before investing in the Notes. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2013. Table of Contents We use our global platform to deliver products to companies efficiently on a worldwide basis. Many of our customers are expanding internationally to serve developing areas in Asia, Eastern Europe, Latin America, India and Russia. Maintaining close proximity to our international customers allows us to serve them more quickly and efficiently and thus build strong relationships. Attractive Intermediate Position. We produce siloxane, the key intermediate required to manufacture silicones, in the United States, Germany and Japan, and source siloxane from a joint venture in China. This manufacturing capacity is sufficient to meet the substantial majority of our current requirements for siloxane. We also source a portion of our requirements through long-term and/or supply agreements. We believe this combination of siloxane supply, along with our ability to purchase siloxane from other suppliers when pricing is advantageous, reduces our overall cost structure and strengthens our overall competitiveness. Leading Fused Quartz and Specialty Ceramics Producer. We believe we are a global leader in the fused quartz and ceramics product markets in which we compete. In particular, we believe we are the largest manufacturer of quartz products for the semiconductor end-market and the second largest manufacturer of quartz products for fiber optics. Our leadership position and profitability are driven by several factors, including strong customer relationships and the precise quality and purity specifications of our products. Additionally, we believe we are a leader in several ceramic materials end-markets, including cosmetic additives. Risk Factors Despite our competitive strengths discussed above, investing in the Notes involves a number of risks, including: Our substantial debt could adversely affect our operations and prevent us from satisfying our obligations under our debt obligations. As of December 31, 2012, we had $3,116 million of consolidated outstanding indebtedness, including short-term borrowings, and, based on the consolidated indebtedness, our annualized cash interest expense is projected to be approximately $291 million based on interest rates at December 31, 2012 without giving effect to any subsequent borrowings under the previous revolving credit facility, the ABL Facility or the Cash Flow Facility, of which $288 million would represent cash interest expense on fixed-rate obligations; If global economic conditions weaken, it will continue to negatively impact our business, results of operations and financial condition; We may be unable to achieve the cost savings or synergies that we expect to achieve from our strategic initiatives, including the Momentive Combination, which would adversely affect our profitability and financial condition; Fluctuations in direct or indirect raw material costs could have an adverse impact on our business; and We depend on certain of our key executives and our ability to attract and retain qualified employees. For a discussion of the significant risks associated with our business, our industry and investing in the Notes, you should read the
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001518883_charger_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001518883_charger_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. CHARGER MINERALS CORPORATION Our Business We were incorporated on April 15, 2011 under the laws of the State of Nevada. The Company has acquired an exclusive option to obtain a 100% interest in a group of four lode mining claims in the Sheep Tanks Mining District, La Paz County, Arizona. The Company intends to conduct mineral exploration on the optioned mining claims in an effort to find economically developable deposits of precious metals We have not commenced our planned exploration program. Our plan of operations is to conduct mineral exploration activities on the Sheep Tanks Property mineral claims in order to assess whether these claims possess commercially exploitable mineral deposits. Our exploration program is designed to explore for commercially viable deposits of gold and other metallic minerals. We have not, nor to our knowledge has any predecessor, identified any commercially exploitable reserves of these minerals on the Sheep Tanks Property mineral claims. We are an exploration stage company and there is no assurance that a commercially viable mineral deposit exists on the Sheep Tanks Property mineral claims. The mineral exploration program, consisting of geological mapping, sampling, geochemical analyses, and trenching is oriented toward identifying areas of mineralized bedrock within the Sheep Tanks Property mineral claims. Currently, we are uncertain of the number of mineral exploration phases we will conduct before concluding whether there are commercially viable minerals present on the Sheep Tanks Property mineral claims. Further phases beyond the current exploration program will be dependent upon a number of factors such as a consulting geologist s recommendations based upon ongoing exploration program results, and our available funds. We are a non-reporting company whose stock is not traded. We intend to begin discussions with various market makers in order to arrange for an application to be made with respect to our common stock, to be approved for quotation on the Over-The-Counter Bulletin Board upon the effectiveness of this prospectus. We are registering shares of our common stock for resale pursuant to this prospectus in order to allow the selling stockholders to sell their holdings in the public market and to begin developing a more liquid public market for our securities to be able to seek public financing and business development opportunities in the future, although we currently do not have any contracts or commitments for any public financing or business development opportunities. Our management would like a more liquid public market for our common stock to develop from shares sold by the selling stockholders. No assurances can be given that our common stock will be approved for quotation on the on the Over-The-Counter Bulletin Board or that a more liquid public market will develop. Our principal offices are located at 5067 East 26th Drive Suite 200, Bellingham, WA 98226, telephone (380)-592-4022. The Offering Common stock offered by selling stockholders 1,670,000 shares. Shares outstanding prior to and after the offering 11,850,000 shares as of September 30, 2013. Use of proceeds We will not receive any proceeds from the sale of the common stock by the selling stockholders. Summary financial data The following financial information summarizes the more complete historical financial information at the end of this prospectus. Balance Sheet As of June 30, 2013 (audited) Total Assets 10,758 Total Liabilities $5,741 Stockholders Equity 5,017 Income Statement Period from April 15, 2011 (inception) to June 30, 2013 (audited) Revenue --0- Total Expenses $(97,483) Net Loss $(97,483)
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001526160_fleetmatic_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001526160_fleetmatic_prospectus_summary.txt
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+Prospectus Summary This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our ordinary shares. You should read this entire prospectus carefully, especially the Risk Factors section of this prospectus and our consolidated financial statements and related notes appearing elsewhere in this prospectus, before making an investment decision. Overview FleetMatics is a leading global provider of fleet management solutions delivered as software-as-a-service, or SaaS. Our mobile software platform enables businesses to meet the challenges associated with managing their local fleets of commercial vehicles and improve productivity by extracting actionable business intelligence from vehicle and driver behavioral data. We offer intuitive, cost-effective Web-based and mobile application solutions that provide fleet operators with visibility into vehicle location, fuel usage, speed and mileage and other insights into their mobile workforce, enabling them to reduce operating and capital costs, as well as increase revenue. As of June 30, 2013, we had more than 19,000 customers who collectively deployed our solutions in over 388,000 vehicles worldwide. The substantial majority of our customers are small and medium-sized businesses, or SMBs, each of which deploy our solutions in 1,000 or fewer vehicles. During the six months ended June 30, 2013, we collected an average of approximately 46 million data points per day from subscribers, and we have aggregated over 43 billion data points since our inception, which we believe provides valuable information that we may consider in the development of complementary solutions and additional sources of revenue. We believe that the addressable market for our fleet management solutions is large, growing and underpenetrated. Frost and Sullivan, an independent research firm, reported that in 2010 there were approximately 18.5 million local commercial fleet vehicles in the U.S. and Canada, 11.3% of which utilized a fleet management solution. We believe that the global market opportunity is much larger and we estimate it to be in excess of 61 million vehicles. Our multi-tenant SaaS solutions are designed to meet the needs of SMBs, overcome existing barriers to adoption, and leverage the volumes of data transmitted to us from in-vehicle devices over cellular networks that we aggregate and analyze from our large and growing subscriber base. We have grown our customer base, the number of vehicles using our solutions and our revenue in each year since our incorporation in 2004. We have developed a differentiated, cost-effective customer acquisition sales model based on leads sourced through both Web-based digital advertising and targeted outbound sales efforts. The following chart shows the aggregate number of vehicles under subscription for our fleet management solution as of December 31 for each of the years presented and as of June 30, 2013: The chart above includes the number of vehicles under subscription with our subsidiary SageQuest, Inc., or SageQuest, before and after our acquisition of SageQuest in July 2010. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED SEPTEMBER 16, 2013 PROSPECTUS 5,976,443 Shares Ordinary Shares Fleetmatics Investor Holdings, L.P., the selling shareholder and our principal shareholder, is selling 5,976,443 of our ordinary shares. We will not receive any proceeds from the sale of shares to be offered by the selling shareholder. Our ordinary shares are listed on the New York Stock Exchange under the symbol FLTX. On September 13, 2013, the last reported sale price of our ordinary shares on the New York Stock Exchange was $45.78 per share. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 and have elected to adopt certain reduced public company reporting requirements. Investing in the ordinary shares involves risks that are described in the Risk Factors section beginning on page 11 of this prospectus. Per Share Total Public offering price $ $ Underwriting discount $ $ Proceeds, before expenses, to the selling shareholder (1) $ $ (1) We have agreed to reimburse the underwriters for certain FINRA related expenses. See Underwriting. The underwriters may also exercise their option to acquire up to an additional 597,644 ordinary shares from our principal shareholder at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The shares will be ready for delivery on or about , 2013. Barclays BofA Merrill Lynch RBC Capital Markets Stifel William Blair Pacific Crest Securities Prospectus dated , 2013. Table of Contents Our subscription revenue in 2012 grew 38.1% to $127.5 million compared to $92.3 million in 2011, and in the six months ended June 30, 2013 grew 38.6% to $80.9 million compared to $58.4 million in the six months ended June 30, 2012. We reported net income in 2012 of $5.4 million compared to net income of $2.9 million in 2011, and we reported net income of $8.6 million in the six months ended June 30, 2013 compared to net loss of $0.4 million in the six months ended June 30, 2012. Our Adjusted EBITDA in 2012 grew 55.8% to $33.9 million compared to $21.7 million in 2011 and in the six months ended June 30, 2013 grew 110.9% to $25.3 million compared to $12.0 million in the six months ended June 30, 2012. For a definition of Adjusted EBITDA and a reconciliation to net income (loss), see the section entitled Summary Consolidated Financial Data Adjusted EBITDA. Industry Background Most small and medium-sized local service and distribution businesses rely on their fleet of commercial vehicles and mobile workforce to deliver products and services. These SMB fleet operators face significant operational challenges. Without knowing the location of each vehicle in a fleet, dispatchers often do not have the information necessary to optimally route their vehicles, resulting in lost time in route to a job location, increased fuel consumption, excessive vehicle mileage, and unnecessary wear and tear. Fleet operators lack oversight of their drivers which makes it more difficult for operators to validate hours worked, discourage unproductive worker behavior and incentivize greater efficiency. Many fleet management alternatives do not adequately address the challenges faced by operators or are poorly suited for SMB adoption given their high up-front costs, technical complexity and difficulty of implementation and use. Fleet operators often use discrete point-to-point solutions, such as cellular phones, to monitor their fleet and mobile workers. These solutions do not enable continuous monitoring, making it difficult to validate hours worked and manage other day-to-day fleet activities. Additionally, paper-based techniques, spreadsheets and other manual processes used to manage fleet data tend to be inefficient and generate minimal business intelligence. Fleet management solutions targeting long-haul fleet carriers are not well-suited to SMB customers as these offerings typically feature complex functionality built into proprietary hardware devices and require high up-front costs associated with implementation. Our Solutions Our SaaS solutions enable businesses to meet the challenges associated with managing their local fleets by extracting actionable business intelligence from vehicle and driver behavioral data. We believe that our solutions benefit customers in the following ways: Reduced operating costs. Businesses that use our solutions can monitor and manage route efficiency and reduce idle time, resulting in lower fuel costs and labor expenses, such as overtime pay. In addition, our software helps companies to monitor vehicle speeds, identify unauthorized usage, minimize fleet wear and tear as well as the likelihood of fines, and increase the prospects of recovering stolen vehicles. Increased worker productivity and revenues. Our solutions enable our customers to enhance worker productivity by minimizing wasted time on and traveling to job sites, detecting extended breaks and unauthorized detours, and provide our customers with the ability to better align compensation with productivity. Designed for SMBs. Our FleetMatics branded product is a competitively-priced solution that is easily accessed and used via a Web browser or mobile application and that can be quickly implemented with the assistance of our large network of third-party installers. A robust platform for data aggregation. We aggregate data that is generated from the use of our solutions with data provided through partnerships, integration with third-party products, commercial or publicly Table of Contents TABLE OF CONTENTS Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001529052_c3-event_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001529052_c3-event_prospectus_summary.txt
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+Prospectus Summary This summary contains material information about us, and the offering. Because it is a summary, it does not contain all the information that you should consider before investing. You should read the entire prospectus carefully, including the Risk Factors and our financial statements and the related notes to those statements included in this prospectus. Except as otherwise required by the context, references in this prospectus to we, our, us, and C3 Event Management, refer to C3 Event Management, Inc. C3 Event Management, Inc. is a development stage company incorporated in the State of Delaware in July of 2011. C3 Event Management, Inc s. address and phone number is: C3 Event Management, Inc. 9846 Bailey Road Cornelius, NC 28031 704-519-7484 Telephone Operating History C3 Event Management, Inc. is a recently incorporated development stage company with no operating results to date other than organizational activities. The purpose of the company is to become the premier event management and planning company throughout the Carolinas. To date, operations have been on an extremely limited basis. The Company is focused on becoming an event planning company primarily serving the Charlotte and Raleigh, North Carolina and markets but may provide services to any other market or region. Our goal is to plan corporate events such as conventions, business conferences, and product launches, as well as social events such as weddings, reunions, and anniversaries, and develop and implement a marketing and sales program to sell these event-planning services. Company Assets C3 Event Management s principal assets ( Assets ) consisted of cash totaling $10 as of December 31, 2012. Company Cash Flow The Company has cash assets derived from a private placement of its stock. For the period from its inception through the period ending June 30, 2012 and December 31, 2012 the Company had Gross Revenues of $0. From inception to the period ending December 31, 2012, the Company had Total Operating Expenses of $13,803, and $129 in accrued interest expense, Net Loss of $13,932, Total Current Assets of $10, Total Assets of $10, Total Current Liabilities of $4,442, and Total Stockholders Equity (Deficit) of $(4,432). Future Assets and Growth Over the next year, the Company hopes to penetrate the local event planning and management market throughout the Carolinas. Within the next twelve months, we hope to market to targeted events in Charlotte, NC and to establish a business relationship with at least five local resorts over the first two to three months of operations. From there, we hope to attract local high-end wedding destinations for our premium pricing services which would allow us to increase our profit margins organically. The Company has yet to develop a website or marketing presence, but over the next year we will continue to develop our marketing strategy and web presence. We hope to position ourselves uniquely in the marketplace, offering superior customer service and points of contact with clients that our competitors lack and a focus on event management and strategic planning. The Company had a Net Loss of $13,932 for the period from inception to December 31, 2012 and anticipates it will operate at a deficit for its next fiscal year and may expend most of its available capital. The Company s cash on hand is, primarily, budgeted to cover the anticipated operating costs for the development of our marketing plan and legal, accounting, and Transfer Agent services. We believe the Company will have sufficient capital to operate its businesses over the next twelve months. There can be no assurances, however, that actual expenses incurred will not materially exceed our estimates or that cash flows from existing assets will be adequate to maintain our businesses. We will bring a customer-service oriented focus into the marketplace for event management and planning. In addition to ensuring that we keep our clients satisfied through superior customer service, we will invest in hiring only high-end planners and securing five star locations to provide a high-end, environmentally rich settings for each individual client. The Company may lose money in its first, full year of operation and it shall require raising additional capital to develop its services. It is not the intention of C3 Event Management, Inc. to be a blank check company as defined under 17 CFR230.419, even though we currently have no revenue and will not be able to implement our business plan without raising additional funds. We have no plans to merge with an unidentified company. Currently, we have friends, family and local businesses in the Charlotte, North Carolina area who have expressed an interest in learning more about our company and potentially becoming an equity stakeholder. Ms. Helms has invested considerable time in the development of research and potential opportunities by attending community events and speaking with decision-makers at a few local venues that Ms. Helms plans to pursue as potential marketing partners. So far, we have designed a logo, set up a website, a Facebook account and a twitter account to begin our brand building and presence on the Web to present a professional image to attract new potential clients. Ms. Helms plans to also follow local event planning and plan to approach triplediscountdisplays.com build us an impactful trade show display for $1,000. Networking is a priority for C3 Event Management and we are making plans to attend industry seminars and network with other professionals through local chamber membership and pursue membership with Business Network International (BNI) to jumpstart our business. The Company currently has a Chief Executive Officer, who is also a Director, Charity Helms. Ms. Helms is our sole employee. Terms of the Offering The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. The offering price of $0.05 was determined by the price shares were sold to our shareholders in a private placement memorandum. $0.05 is a fixed price at which the selling security holders may sell their shares. We plan to seek a the services of a market maker to assist us with a listing of our shares on the OTC Electronic Bulletin Board. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001532961_nv5_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001532961_nv5_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2d37b643082b909524c51dcc91b66705d93227f2
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary sets forth the material terms of the offering, but does not contain all of the information that you should consider before investing in our securities. You should read the entire prospectus carefully before making an investment decision, especially the risks of investing in our securities described under Risk Factors. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to (i) NV5 Holdings, we, us, and our refer to NV5 Holdings, Inc., a Delaware corporation, its consolidated subsidiaries, and the business of Nolte as our historical accounting predecessor, (ii) NV5 refers to NV5, Inc., a Delaware corporation and a wholly owned subsidiary of ours, and (iii) Nolte refers to Nolte Associates, Inc., a California corporation and a wholly owned subsidiary of ours. Overview We are an independently-owned provider of professional and technical engineering and consulting solutions to public and private sector clients. We focus on the infrastructure, construction, real estate, and environmental markets. The scope of our projects includes planning, design, consulting, permitting, inspection and field supervision, and management oversight. We also provide forensic engineering, litigation support, condition assessment, and compliance certification. As the needs of our clients have evolved, we have grouped our capabilities into five core vertical service offerings: infrastructure, engineering, and support services; construction quality assurance; public and private consulting and outsourcing; asset management consulting; and occupational, health, safety, and environmental consulting. Historically, substantially all of our services were concentrated on the first two service sectors. We believe, however, that our three newer service offerings will become increasingly important to our business as we continue to grow through both organic expansion and strategic acquisitions. We operate our business through a network of over 20 locations in California, Colorado, Utah, Florida, and New Jersey. All of our offices utilize our shared services platform, which consists of human resources, marketing, finance, information technology, legal, and other resources at our corporate headquarters. Our shared services platform is intended to optimize the performance of our business as we increase our scale and scope. By maintaining a centralized, shared services platform, we believe we can better manage our business, apply universal financial and operational controls and procedures, increase efficiencies, and drive lower-cost solutions. We currently maintain a staff of approximately 439 employees, which includes approximately 168 licensed engineers and other professionals who provide a wide range of professional and technical solutions to our customers. Combined with our support technology and software, our professionals are equipped to quickly and effectively respond to the needs of our clients. Our primary clients include U.S. federal, state, municipal, and local governments; military and defense clients; and public agencies. We also serve quasi-public and private sector clients from the education, healthcare, Table of Contents SUBJECT TO COMPLETION, DATED MARCH 25, 2013 The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. 1,000,000 Units This is the initial public offering of securities of NV5 Holdings, Inc. We are offering to sell 1,000,000 units in this offering (the Units ), each unit consisting of one share of our common stock (each, a Share ) and a warrant to purchase our common stock (each, a Warrant ). Each Warrant entitles the holder to purchase one Share at an initial exercise price of $ . The Warrants may only be exercised for cash. The Warrants will expire on March , 2018 at 5:00 p.m., New York City time. Prior to this offering, there has been no public market for our securities. The initial public offering price is expected to be between $5.00 and $7.00 per Unit. We have applied to list the Units, Shares and Warrants on the Nasdaq Capital Market under the symbol NVEE , NVEE.U and NVEE.W , respectively. The Warrants will trade together with the Shares only as Units until September , 2013, and thereafter each of the Shares and Warrants will trade separately. We are an emerging growth company and a smaller reporting company under the federal securities laws and will be subject to reduced public company reporting requirements. See Risk Factors beginning on page 11 for a discussion of the factors you should consider before you make your decision to invest in our securities. Per Unit Total Public offering price $ $ Underwriting discounts and commissions (1) $ $ Proceeds, before expenses, to us $ $ (1) See Underwriting beginning on page 87 for disclosure regarding compensation payable to the underwriters by us. We have granted the underwriters a 45-day option to purchase up to a maximum of 150,000 additional Units from us at the public offering price, less the underwriting discounts and commissions, to cover over-allotments, if any. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Delivery of the Units will be made on or about , 2013. Sole Book-Running Manager Roth Capital Partners The date of this prospectus is , 2013 Table of Contents energy, and utilities fields, including schools, universities, hospitals, health care providers, insurance providers, large utility service providers, and large and small energy producers. During our 60 years in the engineering and consulting business, we have worked with such clients and on such well-known projects as (in alphabetical order): California Department of Transportation, or Caltrans, CA; Equatorial Guinea LNG (Liquefied Natural Gas) Facility, Africa; Fort Lauderdale Hollywood International Airport, FL; Miami International Airport, FL; and South Florida Water Management District, FL. Our current representative clients and project portfolio include (in alphabetical order): City of Colorado Springs, CO; Florida Power and Light, FL; Princeton University, NJ; San Diego Gas & Electric, CA; and University of Miami, FL. Industry We provide services in the areas of engineering and consulting. Engineering and consulting applies scientific knowledge to design structures, products, and industrial processes for both the constructed and natural environment. Engineering and consulting also provides clients with technical studies, planning, engineering, design, and construction management services. Clients vary in size and scope from local public agencies and private companies to national governments and large multinational corporations. According to IBISWorld, the industry is extremely fragmented and made up of approximately 141,000 firms in the U.S. in 2012. A large number of these firms are small-scale establishments which typically provide services to regional markets or specialized niches. The firms range from large, global, multidisciplinary suppliers of a comprehensive range of planning, design, and project delivery services to small- to medium-sized companies that tend to specialize in selected areas of the project delivery process. Clients come from all sectors and levels of society and include U.S. federal, state, municipal, and local governmental property owners, quasi-public and private clients from the education, healthcare, energy, and utilities fields, and national governments and large multinational corporations. Competitive Strengths We believe we have the following competitive strengths: Organizational structure that enhances client service. We operate our business using a vertical structure grouped by service offerings rather than the geography-based structure utilized by many of our competitors. This structure ensures that clients engaging our services in any given sector, regardless of the location of the project, have access to the services of our most highly qualified professionals. Our most skilled engineers and professionals in each service sector work directly with the clients engaging those services, which facilitates Table of Contents TABLE OF CONTENTS Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001533526_global_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001533526_global_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001533526_global_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001535031_tumi_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001535031_tumi_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001535031_tumi_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001538375_luxoft_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001538375_luxoft_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001538375_luxoft_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001539894_atlas_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001539894_atlas_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001539894_atlas_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001542597_green_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001542597_green_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001542597_green_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001547063_taminco_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001547063_taminco_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001547063_taminco_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001550960_barking_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001550960_barking_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..3d678c6af2392fea42e7700bafbeb5aeb37e0a10
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001550960_barking_prospectus_summary.txt
@@ -0,0 +1,107 @@
+SUMMARY OF PROSPECTUS
+ 
+
+ To understand this offering fully, you should read the entire prospectus carefully, including the risk factors beginning on page 9 and the financial statements. 
+ 
+
+ General Information about our Company
+ Barking Applications Corporation was incorporated in the state of Nevada on January 11, 2011. Our principal executive offices are located at 5114 Lakeshore Road, Burlington, Ontario, L7L 1B9. Our telephone number is 905-464-5493.
+ 
+
+ Operations
+ We are an "application developer", creating applications for mobile devices that are useful and entertaining. We have not yet commenced our business plans nor developed any applications or products that we can currently market. Our plan is to develop applications for mobile devices and target niches underserved or even un-served by other developers by creating original applications that address some of the common problems of smart phone users and that entertain mobile device users by appealing to basic emotions.
+ 
+
+ We plan to derive revenues from the sale of mobile applications on third party websites such as Apple s Online Store, as well as on our own company website once we implement our business plans and begin development of our proposed products. The sales price of our applications (apps) will be determined based on three factors: the cost to develop the application, the prices of the competition, if any, and the popularity of each individual application. 
+ 
+ We target to grow proactively through continual development of new applications and upgrading of our existing ones after they are released. 
+ 
+
+ We have a short history of operating losses and negative cash flow and have not generated any revenues to date. Our assets as of March 31, 2013 totaled $4,044 and consisted solely of cash. Our cash in the bank totaled $4,044 and represented the balance of cash generated from the issuance of shares to our founder. At March 31, 2013, we had an accumulated deficit of $34,206. As a result, we expect to continue to incur significant losses as we execute our strategies and may never achieve or maintain profitability. If we fail to execute our business strategy or if there is a change in the demand for mobile applications or market conditions, or any other assumptions we used in formulating our business strategy, our long-term strategy may not be successful and we may not be able to achieve and/or maintain profitability. These and other factors raise substantial doubt by our auditors about our ability to continue as a going concern. Our fiscal year end is December 31.
+ 
+
+ Common stock outstanding
+ 38,250,000 
+ 
+
+ Common shares being offered 
+ 1,000,000
+ 
+
+ Termination of the Offering
+ The offering will commence on the effective date of this prospectus and will terminate on or before a period of 180 days have elapsed.
+ 
+
+ Market for our common stock
+ There is presently no public market for our common shares. We anticipate applying for the quotation of our common shares on the OTC Bulletin Board or OTCQB upon the effectiveness of the registration statement of which this prospectus forms a part. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority, which operates the OTCBB and OTCQB, nor can there be any assurance that such application for quotation will be approved.
+ 
+
+ 
+
+ 7
+ 
+
+ 
+
+ 
+
+ 
+
+ Common Stock Control
+ Raymond Kitzul, the president, officer, and sole director currently owns and will continue to own sufficient common shares to control the operations of the registrant.
+ 
+
+ Corporate History and Structure
+ 
+
+ Barking Applications Corporation was founded in the State of Nevada on January 11, 2011 by Raymond Kitzul. He serves as our President, sole Officer and Director.
+ 
+
+ Contractual Arrangements
+ 
+ As a development-stage corporation, we currently have no outstanding contractual arrangements of any kind.
+ 
+
+ The Offering
+ 
+
+ Following is a brief summary of this offering. Please see the Plan of Distribution and the Terms of the Offering sections for a more detailed description of the terms of the offering.
+ 
+
+ 
+
+ 
+ Securities Being Offered:
+ 
+ 
+ A minimum of 270,000 and up to a maximum of 1,000,000 shares of common stock, par value $0.001.
+
+ 
+ 
+ 
+ 
+
+ Offering Price per Share:
+ 
+ 
+ $ .10
+
+ 
+ 
+ 
+ 
+
+ Offering Period: 
+ 
+ 
+ The shares are being offered for a period not to exceed 180 days .
+
+ 
+ 
+ 
+ 
+
+ Gross Proceeds to Our Company: 
+ 
+ 
+ $27,000 (minimum) and up to $100,000 (maximum)
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001552946_enviro_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001552946_enviro_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..7e36eca1942ff20750da444615661b3448e9c666
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001552946_enviro_prospectus_summary.txt
@@ -0,0 +1 @@
+elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including "Risk Factors", "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the Financial Statements, before making an investment decision. The terms "Enviro Cleanse" "we," "us" and "our" as used in this prospectus refer to Enviro Cleanse Inc. Enviro Cleanse Inc. is a new company developing a soil remediation business in the area of Fort McMurray, Alberta. Our mission is to become a soil remediation and site assessment firm in Fort McMurray and within a 20 mile radius. Our office is located at 1516 Tropicana Ave, Suite 155, Las Vegas, Nevada 89119, Telephone (702)789-0552. Table of Contents We were founded by Mrs. Mi Ok Cho, who has years of experience in the soil remediation business, and understands the market potential and the requirements for profitability. Our soil remediation firm is targeted towards Oil and Mining Operations, Municipalities, and Government Agencies looking for Soil Remediation and Land Reclamation Assessment Services. We will need to raise a minimum of $1,180,000 over the next twelve months through public or private debt or sale of equity to execute our business plan to become a revenue generating company. If we are unable to obtain the level of financing, our business may fail. We are endeavoring to be a reporting company with the SEC as we believe doing so will provide us with greater opportunities to access and acquire the additional capital that we require for our growth and to further implement our business plan. In addition, becoming a reporting issuer may provide us with more financing alternatives, due to the transparency provided by the public reporting requirements. On April 30, 2012, the Company issued 15,000,000 shares of common stock at a price of $0.001 per share for a value of $15,000 to Mi Ok Cho, its President. The Company relied on Section 4(2) of the Securities Act for this issuance. On May 16, 2012, the Company issued 10,000,000 shares of common stock at a price of $0.001 per share for a value of $10,000 to thirty five shareholders. We are an Emerging Growth Company as defined in the Jumpstart Our Business Startups Act. We shall continue to be deemed an emerging growth company until the earliest of: (A) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (B) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; (C) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (D) the date on which such issuer is deemed to be a , ' ': large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. Table of Contents As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company we are exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. Because our auditors have issued a going concern opinion, there is substantial uncertainty we will continue operations in which case you could lose your investment. Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months as we lack an operating history. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such we may have to cease operations and you could lose your investment. We currently have no commitments to raise the minimum funds necessary to become a revenue generating company over the next twelve months. Table of Contents The Offering: Securities Being Offered Up to 10,000,000 shares of common stock. Offering Price The selling shareholders will sell our shares at a fixed price of $0.01 per share. Terms of the Offering The selling stockholders may offer their shares through public or private transactions, on or off OTCBB, at a fixed price of $0.01 per share. We will pay all expenses of registering the securities, estimated at approximately $9,000. Termination of the Offering The offering will conclude when all of the 10,000,000 shares of common stock have been sold, the shares no longer need to be registered to be sold due to the operation of Rule 144 or we decide at any time to terminate the registration of the shares at our sole discretion. In any event, the offering shall be terminated no later than two years from the effective date of this registration statement. Securities Issued And to be Issued 25,000,000 shares of our common stock are issued and outstanding as of the date of this prospectus. All of 10,000,000 shares will be sold by existing shareholders. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Market for the common stock There is currently no public market for the shares of our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA to allow our shares of common stock to be traded on the OTCBB, nor can there be any assurance that such an application for quotation will be approved if filed. FINRA operates the OTCBB. We have agreed to bear the expenses relating to the registration of the shares for the Selling Stockholders. Summary Financial Information The following audited financial information summarizes the more complete historical financial information at the end of this prospectus. As of May 31, 2012 (Audited) Balance Sheet Total Assets $ 23,680 Total Liabilities $ 0 Stockholders Equity $ 23,680 Period from April 17, 2012 (date of inception) to May 31, 2012 (Audited) Income Statement Revenue $ - Total Operating Expenses $ 1,320 Net Loss $ (1,320) As of February 28, 2013 (Unaudited) Balance Sheet Total Assets $ 4,931 Total Liabilities $ 0 Stockholders Equity $ 4,931 Three months ended Feb 28, 2013 (Unaudited) Income Statement Revenue $ - Total Operating Expenses $ (6,104) Net Loss $ (6,104) Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001556508_ces_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001556508_ces_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..adc2dbb6bcd8e7b11e4bd619f3e5c10daa0fc982
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001556508_ces_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights selected information contained in this Prospectus. This summary does not contain all the information that may be important to you. You should read the more detailed information contained in this Prospectus, including but not limited to, the risk factors beginning on page 8. In addition, certain statements are forward-looking statements, which involve risks and uncertainties. See Disclosure Regarding Forward-Looking Statements. References in this Prospectus to Green Living Concepts , Company , we , our , or us refer to Green Living Concepts Inc. and its subsidiary, on a consolidated basis, unless otherwise indicated or the context otherwise requires. Forward-Looking Statements This Prospectus contains forward-looking statements that involve risks and uncertainties. We use words such as "anticipate", "believe", "plan", "expect", "future", "intend", and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in the "Risk Factors" section and elsewhere in this Prospectus. Our Company We were formed on April 26, 2010. Green Living Concepts Inc. specializes in assisting commercial and residential clients to build and/or remodel using sustainable and energy efficient solutions. We offer consulting services to clients with both commercial and residential renovations and new construction projects. Our services include interior design, consultation on energy and water efficiency, recycling and waste management as well as assistance with hiring contractors. We also provide assessment services that include a physical inspection, analysis and detailed reporting with recommendations on improving sustainability of a business or residence. We generate revenue from sales of consulting services. We acquire customers through referrals and our primary website, www.TheGreenLivingHome.com, which outlines our service offerings. On May 26, 2010 we have incorporated a wholly owned (ownership interest 100%) subsidiary Green Living Concepts Inc. (Canada). Our audited consolidated financial statements for the years ended March 31, 2012, and 2011 and for the six-month period ended September 30, 2012 included in this Prospectus, include the accounts of our subsidiary. All significant intercompany balances and transactions have been eliminated on consolidation. We have commenced our operations during the year ended March 31, 2011. As of September 30, 2012 we have generated $36,980 in revenues and have incurred $60,606 in operating costs since our inception on April 26, 2010. To date we have relied upon revenues from our operations and sale of our securities in unregistered private placement transactions to fund our operations. We are a development stage company with a limited operating history. Accordingly, for the foreseeable future, we will continue to be dependent on revenues from operations and additional financing in order to maintain our operations and continue with our corporate activities. This offering and any investment in our common stock involve a high degree of risk. If our future revenues will not be sufficient to cover our operating costs we may be obliged to cease business operations due to lack of funds. If we raise only the minimum amount of proceeds from this offering, we will have limited funds available to build and grow our business. There is no assurance that we will achieve any of additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities. We may also rely on loans from our Directors; however, there are no assurances that our Directors will provide us with any additional funds. Currently, we do not have any arrangements for additional financing. We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop, or expand our operations. Equity financing could result in additional dilution to existing shareholders. We face many challenges to continue operations, including our limited operating history, competition, general economic conditions, etc. Please review the "Risk Factors" starting on page 7 of this offering. Our Directors collectively own 100% of the 7,000,000 outstanding shares of our common stock as of the date of this Offering. If the minimum amount of the shares will be sold, our Directors will own 60.87% of our outstanding common stock. Accordingly, they will have a significant influence in determining the outcome of all corporate transactions or other matters, including mergers, consolidations and the sale of all or substantially all of our assets. The interests of our directors may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders. Our principal executive offices are located at 1810 E. Sahara Avenue, Suite 1495, Las Vegas, Nevada and our telephone number is (702) 866-9960. Our primary website address is www.thegreenlivinghome.com. The information on, or that can be accessed through this website is not part of this prospectus. We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act. The Company shall continue to be deemed an emerging growth company until the earliest of: (a) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (b) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; (c) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (d) the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. As an emerging growth company the company is exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company the company is exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. Notwithstanding the above, we are also currently a smaller reporting company , meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a smaller reporting company , at such time are we cease being an emerging growth company , the disclosure we will be required to provide in our SEC filings will increase, but will still be less than it would be if we were not considered either an emerging growth company or a smaller reporting company . Specifically, similar to emerging growth companies , smaller reporting companies are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; are not required to conduct say-on-pay and frequency votes until annual meetings occurring on or after January 21, 2013; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings due to our status as an emerging growth company or smaller reporting company may make it harder for investors to analyze the Company s results of operations and financial prospects. The Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. The Offering Following is a brief summary of this Offering: Securities being offered: 4,500,000 shares of common stock minimum and 50,000,000 shares of common stock maximum, par value $0.001 Offering price per share: $ 0.008 Offering period: The shares are being offered for a period of up to 270 days. The offering period can be extended for additional 180 days at our discretion. Net proceeds to us: Approximately $28,454 assuming the minimum number of shares is sold. Approximately $392,454 assuming the maximum number of shares is sold. Use of proceeds: We will use the proceeds to pay for the implementation of our business plan, administrative expenses and general working capital. (i) Number of shares outstanding before the offering: 7,000,000 Number of shares outstanding after the offering: 11,500,000 (if minimum number of shares are sold) 57,000,000 (if maximum number of shares are sold) (i) If the minimum amount of the shares is sold we will use the proceeds to pay for offering expenses of $7,546. Of the $7,546, the amounts to be paid from the proceeds for expenses of the offering are: $3,500 for accounting fees; $1,500 for filing fees; $1,400 for legal fees and expenses; $46 for registration fee; and $1,100 for transfer agent fees. We will use the rest of the funds (net of offering expenses) for paying off our current liabilities, hiring new personnel and implementation of our business plan. Selected Financial Data The following financial information summarizes the more complete historical financial information at the end of this Prospectus. The summary information below should be read in conjunction with Management s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included elsewhere in this Prospectus. Income Statement Data: Six Months Ended September 30, 2012 (Unaudited) Year Ended March 31, 2012 (Audited) From inception (April 26, 2010) to March 31, 2011 (Audited) Revenue $ 17,640 $ 18,300 $ 1,040 Cost of Revenues $ (10,881) $ (15,613) $ (689) Expenses* $ (25,915) $ (33,557) $ (1,679) Net Income (Loss) $ (19,156) $ (30,870) $ (1,328) * - Include foreign currency translation loss. Balance Sheet Data: September 30, 2012 (Unaudited) March 31, 2012 (Audited) March 31, 2011 (Audited) Working Capital $ (46,578) $ (25,198) $ (1,328) Total Assets $ 4,573 $ 8,945 $ 1,040 Total Liabilities $ 48,927 $ 34,143 $ 2,368 As of September 30, 2012 we had a working capital deficiency of $46,578 (March 31, 2012: $25,198) and accumulated deficit of $(51,354) since inception.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001556884_kofax-ltd_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001556884_kofax-ltd_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..41338dbb4fee8f34624bd805eb4d277e0c49fc2a
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001556884_kofax-ltd_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained in this prospectus. It does not contain all of the information that you should consider in making your investment decision. Before investing in our common shares, you should read this entire prospectus carefully, including the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and the Kofax plc and Kofax Limited financial statements and related notes for a more complete understanding of our business and this offering. Except as otherwise required by the context, references to Kofax, the Company, we, us and our are to (1) Kofax plc, a public limited company organized under the laws of the United Kingdom, and its subsidiaries, or Kofax (U.K.), for all periods prior to the completion of the scheme of arrangement described below, and (2) Kofax Limited, a Bermuda company, and its subsidiaries, or Kofax (Bermuda), for all periods after the completion of the scheme of arrangement. WHO WE ARE We are a leading provider of smart process applications software and related maintenance and professional services for the critical First Mile of interactions between businesses, government agencies and other organizations (collectively, organizations) and their customers, citizens, vendors, employees and other parties (collectively, constituents). The First Mile represents those initial information-intensive interactions customers have with organizations. Our software enables organizations to design, deploy, and operate comprehensive systems that create an essential link between their systems of engagement, which generate real time, information-intensive communications from constituents, and their systems of record, which are typically large scale enterprise applications and repositories used to manage their internal operations. Our software is designed to streamline critical information processing, which we believe allows our users to be more responsive to their constituents and is intended to enable our customers to provide better service, gain competitive advantage and grow their organizations while reducing their costs and improving their regulatory compliance. We operate on a global basis, and as of June 30, 2013, we had 1,248 employees located in 32 countries. We utilize a hybrid go-to-market model that delivers our software and services through both our direct sales and service employees and an indirect channel of more than 850 authorized resellers, original equipment manufacturers and distributors located in more than 75 countries as of June 30, 2013. We have approximately 20,000 active installations of our software with users in financial services, insurance, government, healthcare, supply chain (manufacturing, distribution, retail and logistics), business process outsourcing and other vertical markets, including 67 of the Fortune Global 100 companies. Our annual total revenue grew from $170.0 million for the fiscal year ended June 30, 2009, to $266.3 million for the fiscal year ended June 30, 2013, representing a compound annual growth rate (CAGR) of 11.9%. During this same period, our income from operations grew from $3.4 million to $25.1 million, representing a CAGR of 64.8%, and our income from operations as a percentage of total revenue increased from 2.0% to 9.4%. On a non-IFRS basis, our adjusted income from operations grew from $18.0 million to $46.7 million, representing a CAGR of 26.9%, and our adjusted income from operations as a percentage of total revenue grew from 10.6% to 17.5%. For a reconciliation of IFRS income from operations to non-IFRS adjusted income from operations, see Summary Historical Consolidated Financial Data Non-IFRS Measures. THE CHALLENGE The business challenge arising in First Mile interactions is that their flow is often controlled by inflexible systems of record, which can make them labor intensive, slow and prone to errors and can adversely affect a customer s perception of the business. Systems of record are generally large scale, expensive and typically rigid Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION DATED NOVEMBER 22, 2013 2,000,000 Common Shares Kofax Limited We are offering 2,000,000 of our common shares. We expect the initial public offering price will be between $5.25 and $6.25 per common share. We have applied to list our common shares on The NASDAQ Global Select Market under the symbol KFX. Prior to this offering the ordinary shares of Kofax plc have traded, and subsequent to this offering the common shares of Kofax Limited will trade, on the London Stock Exchange under the symbol KFX.L. The last reported sales price of Kofax plc on the London Stock Exchange on November 21, 2013 was 375.50 pence or $6.07 (based on the rate of exchange on that day). Before buying any common shares, you should carefully consider the risk factors described in Risk Factors beginning on page 17. These Risk Factors include discussion of our status as an emerging growth company under the federal securities laws, and the reduced public company reporting requirements that we are required to comply with based on that status. We are an emerging growth company as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements. Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Public Offering Price $ $ Underwriting Discounts and Commissions (1) $ $ Proceeds, Before Expenses, to the Company $ $ (1) See Underwriting beginning on page 130 for disclosure regarding compensation payable to the underwriter. The underwriter may also purchase up to an additional 300,000 common shares from us at the public offering price, less the underwriting discounts and commissions, within 30 days from the date of this prospectus to cover over-allotments, if any. The underwriter expects to deliver common shares against payment in New York, New York on or about , 2013. Craig-Hallum Capital Group The date of this prospectus is , 2013 Table of Contents enterprise applications and repositories of enterprise resource planning (ERP), customer relationship management (CRM), enterprise content management (ECM), records management and other systems that organizations use to manage their internal operations. Systems of engagement are the ways in which organizations interact with their customers. They range from face to face interactions at brick and mortar branch offices to web portals to other demand generating activities that drive customers to an organization s web or social media sites. An organization s systems of engagement generate an enormous amount and variety of real time, information intensive communications from constituents on a daily basis via paper, faxes, emails, internet portals, mobile devices, Electronic Data Interchange and eXtensible Markup Language data streams, short message services, multimedia messaging services and other sources, all of which need to be processed in an accurate, timely, and cost effective manner. These communications arrive as both structured and unstructured information in the form of letters, resumes, new account enrollments, loan applications, insurance claims, purchase orders, invoices, regulatory filings and many other interactions. The information in these communications must be captured, extracted, validated, analyzed and acted upon, and then delivered into an organization s systems of record for additional processing, use and storage in repositories for archive and retrieval purposes. Delays and errors caused by invalid information and inconsistent processing can adversely impact an organization s competitive positioning, finances, financial reporting and relations with its constituents and regulatory agencies. Traditional methods for accomplishing the tasks referenced above typically begin with the aggregation of paper-based documents in a central location or mailroom. The documents are then distributed to relatively highly paid workers who manually enter information into systems of record, before storing the documents in cabinet-based filing systems. The continued use of these paper-based processes is substantiated by data from numerous independent sources. For example, in March 2010, CNN reported that organizations archive 62% of their important documents in paper form. More recently in July 2013, Harvey Spencer Associates estimated that organizations globally spend approximately $25-30 billion a year manually keying information from paper documents. As a result of these challenges, we believe there is a significant opportunity to automate these processes and thereby address these challenges and limitations. OUR SOLUTION Our smart process applications software combines industry leading capture, business process management and dynamic case management, mobile and analytics capabilities to automate the labor-intensive processes needed to capture and extract information, and then analyze, act upon and deliver that information to systems of record. Smart process applications are a new category of software designed to support business activities that are people-intensive, highly variable, loosely structured and subject to frequent change. Our smart process applications software allows users to scan paper-based communications using desktop scanners, high volume, production level scanners and multi-function peripherals, to take pictures of those communications using cameras in mobile devices to produce digital images and import communications received in an electronic format. Regardless of how the information is captured, any related images are then automatically enhanced for better viewing and information extraction purposes. The captured information is separated into logical parts such as pages, documents and attachments. A variety of optical character recognition, intelligent character recognition, barcode recognition, mark sense, parsing algorithms, and other extraction technologies are then automatically applied. Our users only have to manually correct or enter any erroneous or suspicious information or any Table of Contents Table of Contents additional content that cannot be effectively captured using automated information extraction technologies. Check box and complex custom business rules can also be automatically applied to all extracted information to ensure its accuracy and validity. Our software then automates the labor-intensive processes needed to analyze, act upon and deliver that information to systems of record. Additional business rules are applied to identify and resolve any inconsistencies or exceptions that arise, users can collaborate with constituents to obtain missing or trailing documents, and users can view and manipulate graphical reports produced by our analytics software in order to make more intelligent decisions sooner than otherwise possible. The resulting information from such interactions is then automatically delivered into systems of record. The entire process is automatically directed and controlled by predefined workflows and incorporates dynamic case management capabilities to deal with unpredictable workflow requirements. In its July 2013 report, The 2013-2014 Worldwide Market for Document Capture Software, Harvey Spencer Associates reported that in 2012 Kofax was the leading revenue vendor with 14% share. In August 2012 Forrester published its Wave for Multichannel Capture, or the ability to capture information from a wide variety of different sources, and ranked Kofax as the Leader in providing those capabilities. In addition, in January 2013 Forrester published the results of a study commissioned by Kofax, and reported that in 2012 Kofax had a market leading 15% share of the Multichannel Capture market. Kofax TotalAgility, our business process and dynamic case management software, was shown to be Visionary in Gartner s April 2011 Magic Quadrant for Business Process Management (BPM) and a Leader in Forrester s January 2011 Wave for Dynamic Case Management. In addition, Kofax was shown as a Leader Forrester s April 2013 Wave for Smart Process Applications. As a result of this independent recognition and our business strengths, we believe we can secure a meaningful share of the BPM and smart process applications software markets. OUR OPPORTUNITY In June 2010, Gartner reported that chief information officers ranked improving business processes and reducing costs as two of their top three priorities. In November 2010, the Association for Image and Information Management (AIIM), reported that image and content capture yield two of the three fastest returns on investment of any enterprise application software expenditures. Further, 42% of capture users surveyed by AIIM in 2012 report returns on investment of 12 months or less and 57% report returns on investment of 18 months or less. In April 2012, AIIM published a separate report that estimated the following survey responses: One out of three small and medium sized businesses and 22% of the largest businesses have yet to adopt any paper free processes; 10% or less of the processes that could be paper free have in fact been addressed; 70% of survey respondents believed the use of scanning and automated capture improves the speed of responses to constituents by three times or more, and nearly 30% believe the factor is ten times or more; 52% believe administrative staff would be 33% or more productive if processes were automated using capture-based technology; and Two out of three consider mobile technologies to be important or extremely important to improving business processes, and 45% believe mobile devices would improve the speed of responses to constituents by three times or more. However, more than 75% have made no progress in taking advantage of this opportunity. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001558432_capstone_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001558432_capstone_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..ebed12f4b1cca005a046af671fd1b623df69ca5c
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary contains basic information about us and the offering. Because it is a summary, it does not contain all the information that you should consider before investing. You should read the entire prospectus carefully, including the risk factors and our financial statements and the related notes to those statements included in this prospectus. Except as otherwise required by the context, references in this prospectus to "we," "our," "us" and Creative App Solutions refer to Creative App Solutions, Inc. Creative App Solutions is a development stage company incorporated in the State of Nevada on July 10, 2012. We were formed to engage in the business of designing and distributing software applications APPS for mobile devices such as those based on Apple and Android platforms. In July 2012 we commenced our planned principal operations by forming the corporation and began the writing of our initial app. Since our inception on July 10, 2012 through August 31, 2012, we have not generated any revenues and have incurred a net loss of $11,196. Throughout July and August of 2012 our only business activity was the formation of our corporate entity and the development of our business model. In September and October we started programming for our initial app, NewtCenter. We anticipate the commencement of generating revenues in the next twelve months, of which we can provide no assurance. The capital raised in this offering has been budgeted to cover the costs associated with the offering, such as accounting services, as well as various filing fees and transfer agent fees. Additionally, capital raised in this offering will fund website and marketing development and working capital. We believe that our lack of significant expenses and our ability to commence with design and subsequent sales of beta tested apps, may generate revenues sufficient to support the limited costs associated with our initial ongoing operations for the next twelve months. However, there can be no assurance that the actual expenses incurred will not materially exceed our estimates or that cash flows from initial app sales will be adequate to maintain our business. As a result, our independent auditors have expressed substantial doubt about our ability to continue as a going concern in the independent auditors report to the financial statements included in the registration statement. Creative App Solutions is building a business based on the design and sale of mobile app solutions for both the Apple and Android platforms. At this time we are in the process of implementing our marketing plan which includes graphic design work, lead development, and website and app design. We have also started programming for our initial app, NewtCenter; however we do not presently have a market-ready product, and we currently do not have any customers and thus have generated no revenues. We intend to file a trademark for our corporate logo by the end of 2012. We have no intentions to be acquired or to merge with an operating company. Additionally, our shareholders have no intention of entering into a change of control or similar transaction. No member of our management or any of our affiliates have been previously involved in the management or ownership of a development stage company that has not implemented its business plan, engaged in a change of control or similar transaction or has generated no or minimal resources to date. We commenced operations in July of 2012, since then we have been developing our marketing plan, establishing market contacts, researching outlets for sale and distribution as well as writing and designing the programming for our initial app, NewtCenter. Our business model, which is still evolving as new ideas are brought forth, is built on revenue streams from the sales of unique and innovative mobile apps. Mobile App Creation and Sales Creative App Solutions initially plans to design custom and unique apps for mobile devices. We intend to develop and write custom software apps for devices such as the iPod , iPad , iPhone and Android based devices. As of the date of this prospectus we have one officer who also serves as our sole director, our sole employee, and who we anticipate will devote a significant portion of his time to the company going forward. Additionally, even with the sale of securities offered hereby, we will not have the financial resources needed to hire additional employees or meaningfully expand our business. Even though we intend to generate revenues upon the commencement of our marketing plan, it is possible we will sustain operating losses for at least the next 12 months. Even if we sell all the securities offered, a substantial portion of the proceeds of the offering will be spent for costs associated with the offering, fees associated with SEC reporting requirements and app writing and development. Investors should realize that following this offering we will be required to raise additional capital to cover the costs associated with our plan of operation. Creative App Solutions address and phone number are: Creative App Solutions, Inc. 3965 Paula St. La Mesa, CA 91941 (619) 699-9669 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A (Amendment No. 3 ) Commission File Number 333-184457 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Creative App Solutions, Inc. (Exact name of registrant as specified in its charter) Nevada (State or other jurisdiction of incorporation or organization) 7371 (Primary Standard Industrial Classification Code Number) 46-0684479 (I.R.S. Employer Identification Number) 3965 Paula St. La Mesa, CA 91941 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Ryan Faught, President Creative App Solutions, Inc. 3965 Paula St. La Mesa, CA 91941 (619) 699-9669 (Name, address, including zip code, and telephone number, including area code, of agent for service) Approximate date of commencement of proposed sale to the public: As soon as practicable after the registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated file, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company x
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001558465_petrogress_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001558465_petrogress_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001558465_petrogress_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001559123_clearpoint_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001559123_clearpoint_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..f7094c7c7f138e1eefd339e03697684a173857ca
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001559123_clearpoint_prospectus_summary.txt
@@ -0,0 +1 @@
+The following summary highlights some of the information in this prospectus. It may not contain all of the information that is important to you. To understand this offering fully, it is important that you read the entire prospectus carefully, including the "RISK FACTORS" and our financial statements and the notes accompanying the financial statements that appear elsewhere in this prospectus. Unless otherwise specifically noted, the terms "Company," "we," "us" or "our" refers to CLEARPOINT RESOURCES INC. CORPORATE BACKGROUND AND INFORMATION CLEARPOINT RESOURCES INC. Clearpoint Resources Inc. was organized under the laws of the State of Nevada on May 31, 2012, to explore mineral properties in North America. Clearpoint Resources Inc. is engaged in the exploration for quartz and other minerals, there are no activities through today. The Company has acquired one Mineral Titles Online ("MTO") mineral claim totaling 290.87 hectares. The Jervis Inlet Property is located in the McMurray Bay area, BC; about 40 kilometers east of Powell River and 110 kilometers northwest of Vancouver, BC. At the south end of the claim is the easterly flowing Barren Creek and Barren Lake which empties into Jervis Inlet. We refer to these mining claims as the Jervis Inlet Property. This property is without known reserves. To current date the Company has never commenced any operational/exploration activity other than issuing shares. The Jervis Inlet Property currently comprises of one MTO, consisting of 14 cell claim units, totaling 290.87 hectares. BC Tenure # Work Due Date Units Total Area (Ha) ----------- ------------- ----- --------------- 985302 May 10, 2013 14 290.87 We require an estimated total of $260,000 to implement the two phases of our exploration plan. We have not yet commenced our exploration plan. We are an exploration stage company and we have not realized any revenues to date. We do not have sufficient capital to enable us to commence and complete our exploration program. We will require financing in order to conduct the exploration program described in the section entitled, "Business of the Issuer." Our auditors have issued a going concern opinion, raising substantial doubt about Clearpoint Resources Inc.'s financial prospects and the Company's ability to continue as a going concern. We are not a "blank check company," as we do not intend to participate in a reverse acquisition or merger transaction. Securities laws define a "blank check company" as a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person. With its current assets, the Company can remain operational through 2012 if it does not complete Phase 1 of its program and only pays the government fees to keep the claims valid. However, the Company plans to raise the capital necessary to fund our business through a private placement and public offering of our common stock. The Company intends to work directly with private placees once this registration statement is declared effective. The Company anticipates that they will have either a private placement or additional funding from its founder by the end of 2012 in order to conducts its operations. Our offices are located at: 7558 W. Thunderbird Rd #1-486, Peoria, Arizona 85381. Telephone: (602) 509-2822 The Offering Securities offered 8,000,000 shares of common stock Selling stockholder Charles Irizarry Offering price $0.002 per share Shares outstanding prior to the offering 20,000,000 shares of common stock Shares to be outstanding after the offering 20,000,000 shares of common stock Use of proceeds The Company will not receive any proceeds from the sale of the common stock by the selling stockholder. SUMMARY FINANCIAL INFORMATION The following tables set forth the summary financial information for the Company. You should read this information together with the financial statements and the notes thereto appearing elsewhere in this prospectus and the information under "Plan of Operation." STATEMENTS OF OPERATION Period Ended August 31, 2012 --------------- Revenues 0 Operating expenses 5,675 ----------- Net loss from operations (5,675) Net loss before taxes (5,675) Loss per share - basic 0.00 Weighted average shares outstanding basic 20,000,000 BALANCE SHEET DATA At August 31, 2012 ------------------ Cash and cash equivalents 17,825 Total current assets 17,825 Mineral property 8,500 ------- Total assets 26,325 Accounts Payable 2,000 ------- Total current liabilities 2,000 Common stock 20,000 Additional paid-in capital 10,000 Deficit accumulated during exploration period (5,675) ------- Total stockholder's equity 24,325 ------- Total liabilities and stockholder'sequity 26,325
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001559684_tuba-city_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001559684_tuba-city_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..f6e56bcc48ccd17afeceebd4877701bb6f274a6b
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001559684_tuba-city_prospectus_summary.txt
@@ -0,0 +1 @@
+The following summary highlights some of the information in this prospectus. It may not contain all of the information that is important to you. To understand this offering fully, it is important that you read the entire prospectus carefully, including the "RISK FACTORS" and our financial statements and the notes accompanying the financial statements that appear elsewhere in this prospectus. Unless otherwise specifically noted, the terms "Company," "we," "us" or "our" refers to TUBA CITY GOLD CORP. CORPORATE BACKGROUND AND INFORMATION TUBA CITY GOLD CORP. Tuba City Gold Corp. was organized under the laws of the State of Nevada on June 1, 2012, to explore mineral properties in North America. Tuba City Gold Corp. is engaged in the exploration for gold and other minerals. The Company has acquired one MTO mineral claim containing 7 cell claim units totaling 147.115 hectares in area. The property is accessed by following the Island Highway, approximately 25 kilometres northwest from Qualicum Beach, B.C. and is approximately 15 kilometres northwest of Horne Lake. We refer to these mining claims as the Rosewall Gold Property. This property is without known reserves. The Rosewall Gold Property comprises one MTO mineral claim containing 7 cell claim units totaling 147.115 hectares in area. BC Tenure # Work Due Date Staking Date Total Area (Ha.) ----------- ------------- ------------ ---------------- 941098 Jan. 16, 2013 Jan. 16, 2012 147.115 We require an estimated total of $236,625 to implement the three phases of our exploration plan. We have not yet commenced our exploration plan. We are an exploration stage company and we have not realized any revenues to date. We do not have sufficient capital to enable us to commence and complete our exploration program. We will require financing in order to conduct the exploration program described in the section entitled, "Business of the Issuer." Our auditors have issued a going concern opinion, raising substantial doubt about Tuba City Gold Corp.'s financial prospects and the Company's ability to continue as a going concern. We are not a "blank check company," as we do not intend to participate in a reverse acquisition or merger transaction. Securities laws define a "blank check company" as a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person. With its current assets, the Company can remain operational through 2012 if it does not complete Phase 1 of its program and only pays the government fees to keep the claims valid. However, the Company plans to raise the capital necessary to fund our business through a private placement and public offering of our common stock. The Company intends to work directly with private placees once this registration statement is declared effective. The Company anticipates that they will have either a private placement or additional funding from its founder by the end of 2012 in order to conducts its operations. Our offices are located at: 250 King Street West, Dundas, Ontario, L9H 1V9. Telephone: (905) 628-6000 THE OFFERING Securities offered 6,000,000 shares of common stock Selling stockholder Braden Klumpp Offering price $0.002 per share Shares outstanding prior to the offering 12,000,000 shares of common stock Shares to be outstanding after the offering 12,000,000 shares of common stock Use of proceeds The Company will not receive any proceeds from the sale of the common stock by the selling stockholder. SUMMARY FINANCIAL INFORMATION The following tables set forth the summary financial information for the Company. You should read this information together with the financial statements and the notes thereto appearing elsewhere in this prospectus and the information under "Plan of Operation." CONSOLIDATED STATEMENTS OF INCOME Period Ended July 31, 2012 ------------- Revenues 0 Operating expenses 4,008 Net loss from operations 4,008 Net loss before taxes 4,008 Loss per share - basic and diluted 0.000 Weighted average shares outstanding basic 12,000,000 BALANCE SHEET DATA At July 31, 2012 ---------------- Cash and cash equivalents 19,825 Total current assets 19,825 Mineral property 7,500 Total assets 27,325 Accounts payable 1,333 Total liabilities 1,333 Common stock 12,000 Additional paid-in capital 8,000 Deficit accumulated during exploration period (4,008) Total stockholders' equity 25,992 Total liabilities and stockholders' equity 27,325
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001561781_nexus_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001561781_nexus_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..242e98402217827f05d9075dffaa98acea1de1e9
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+++ b/parsed_sections/prospectus_summary/2013/CIK0001561781_nexus_prospectus_summary.txt
@@ -0,0 +1,604 @@
+Prospectus
+
+Nexus Enterprise Solutions, Inc.
+
+7,492,000 Shares of Common Stock
+
+Par Value $0.001 per share
+
+No Minimum
+
+This prospectus relates to the offering by the selling stockholders of Nexus Enterprise Solutions, Inc. of up to 7,492,000 shares of its Common Stock, par value $0.001 per share. Currently, there is no market for our securities. The Company will not receive any proceeds from the sale of common stock. The selling stockholders have advised us that they will sell the shares of common stock being registered from time to time in private transactions to other individuals, at the initial offering price of $0.25, which was determined arbitrarily by the Company and bears no relationship to the Company's assets, book value, potential earnings or any other recognized criteria of value. until the shares are quoted on the Over the Counter Bulletin Board ( OTCBB ) or national securities exchange, and thereafter at prevailing market prices,in privately negotiated transactions or otherwise as described under the section of this prospectus titled Plan of Distribution . To be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market in our common stock. While the Company plans to have its shares quoted on the OTCBB there is no assurance that its shares will be approved for quotation on the OTCBB or on any other quotation service or exchange. 
+
+You should rely only on the information contained in this prospectus or any prospectus supplement or amendment. We have not authorized anyone to provide you with different information.
+
+Nexus Enterprise Solutions, Inc. is an operating company that is currently generating revenue. However, the company has had recurring losses from operations and our auditors have raised questions about our ability to continue as a going concern. Any investment in the shares offered herein involves a high degree of risk. One should purchase shares only if one can afford a complete loss of one s investment.
+
+The company will not receive any proceeds from the sale of common stock.
+
+There is no current market for the securities. Although the registrant s common stock has a par value of $0.001, the registrant has valued the common stock in good faith and for the purposes of the registration fee, based on $0.25 per share. In the event of a stock split, stock dividend or similar transaction involving our common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act of 1933, as amended. 
+
+We are an emerging growth company as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for future filings.
+
+BEFORE INVESTING, YOU SHOULD CAREFULLY READ THIS PROSPECTUS AND, PARTICULARLY, THE RISK FACTORS SECTION, BEGINNING ON PAGE 8. 
+
+Neither the U.S. Securities and Exchange Commission nor any state securities division has approved or disapproved these securities, or passed upon the accuracy or adequacy of the disclosures in the prospectus. Any representation to the contrary is a criminal offense.
+
+3
+
+TABLE OF CONTENTS
+
+ 
+
+ Page No.
+
+SUMMARY OF PROSPECTUS
+
+ 
+
+RISK FACTORS
+
+8
+
+FORWARD LOOKING STATEMENTS
+
+15
+
+USE OF PROCEEDS
+
+16
+
+DETERMINATION OF OFFERING PRICE
+
+16
+
+DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES
+
+17
+
+SELLING SHAREHOLDERS
+
+17
+
+PLAN OF DISTRIBUTION
+
+19
+
+DESCRIPTION OF SECURITIES
+
+20
+
+INTEREST OF NAMED EXPERTS AND COUNSEL
+
+21
+
+DESCRIPTION OF OUR BUSINESS
+
+21
+
+DESCRIPTION OF PROPERTY
+
+26
+
+LEGAL PROCEEDINGS
+
+26
+
+MARKET FOR COMMON EQUITY AND RELATED 
+
+ STOCKHOLDER MATTERS
+
+27
+
+MANAGEMENT'S DISCUSSION AND ANALYSIS OR 
+
+ PLAN OF OPERATION
+
+28
+
+CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 
+
+ AND FINANCIAL DISCLOSURE
+
+32
+
+DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND 
+
+ CONTROL PERSONS
+
+32
+
+EXECUTIVE COMPENSATION
+
+SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS 
+
+ AND MANAGEMENT
+
+36
+
+TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND 
+
+ CERTAIN CONTROL PERSONS
+
+37
+
+INDEMNIFICATION
+
+38
+
+AVAILABLE INFORMATION
+
+38
+
+FINANCIAL STATEMENTS
+
+38
+
+4
+
+NEXUS ENTERPRISE SOLUTIONS, INC.
+
+SUMMARY OF PROSPECTUS
+
+One should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to "we," "us," "our," the Company , Nexus Enterprise Solutions and Nexus refer to Nexus Enterprise Solutions, Inc.
+
+General Information about Our Company
+
+Nexus Enterprise Solutions, Inc. ( Nexus ) was incorporated in the State of Wyoming on October 19, 1995 as Global Link Technologies, Inc. On June 10, 2008, Global Link Technologies filed Articles of Amendment with the State of Wyoming changing its name to MutuaLoan Corporation. On June 16, 2011 (as filed with the State of Wyoming on September 16, 2011), MutuaLoan Corporation entered into a business combination with Nexus Enterprise Solutions, Inc. ( Nexus Florida ). The business combination was accounted for as a reverse merger recapitalization. The accounting target/legal acquirer was MutuaLoan. The accounting acquirer/legal target was Nexus Florida. Nexus is currently conducting operations and generating revenue. 
+
+Based in Lighthouse Point, Florida, Nexus is a lead generation services company dedicated to helping our customers identify, engage and develop long term relationships with their clients. Through a host of proprietary lead generation systems designed to identify potential clients for our customers, Nexus Enterprise Solutions, Inc. provides a broad range of internet marketing strategies to capture targeted buyer data and use that data to generate revenues through the sale of leads to our customers. Nexus Enterprise Solutions, Inc. is quickly expanding into a number of different industries and currently serves as a lead generation engine for several of the nation s largest companies in the insurance and financial service sectors.
+
+The Company s current business plans include expanding its lead generation services, and the Company derives revenue by way of the sale of leads through our automated system. The Company obtains its leads by purchasing them from accredited brokers, as well as by using online and offline lead generation methods as are described below. 
+
+Online generation includes the use of proprietary lead portals, search engine optimization, pay per click services, email advertising, online internet publishers, website banner advertisements as well as the use of blogs, social networking sites, and affiliate networks and programs.
+
+Offline generation includes the use of live phone leads, whereby the Company would use a predictive dialer call center and an overseas outsourced call center in order to generate potential leads for our customers. 
+
+The cost of developing an automated system such as ours is prohibitive for a majority of companies. We fulfill this need by allowing companies to use our lead generation technology, forms, landing pages etc, for a fee. We currently are back logged with the amount of companies looking to buy and sell leads to us, our carriers and agencies. We are currently focusing our attention on the auto insurance market, but expect to expand to other industries in the very near future.
+
+Nexus Enterprise Solutions, Inc. (Nexus) is redefining the current prospect and lead generation and acquisition industry by developing an information exchange marketplace which allows our customers who are sellers and buyers of leads, and other information assets, to operate in an optimized, transparent, and efficient way to transact deals without the devaluation experienced in today s markets and systems. This is accomplished primarily through systems and processes which enable enhanced business intelligence and management thereby empowering stakeholders on both sides of the transaction to make well-informed and meaningful connections with each other.
+
+The administrative office of the Company is located at 5340 N. Federal Highway, Suite 206, Lighthouse Point, Florida 33064, and the company also rents offsite administrative and support services. The Company plans to use 
+
+5
+
+these offices until it requires larger space. The Company s fiscal year end is December 31st. The Company has not been subject to any bankruptcy, receivership or similar proceeding.
+
+The Offering
+
+Following is a brief summary of this offering. Please see the Plan of Distribution section for a more detailed description of the terms of the offering.
+
+Securities Being Offered
+
+by the Selling Shareholders:
+
+7,492,000 shares of common stock, par value $.001, 
+
+Offering Price per Share:
+
+$0.25
+
+Offering Period:
+
+The shares may be sold from time to time by the selling shareholders, upon the effectiveness of this Registration Statement 
+
+Net Proceeds to Our Company:
+
+The Company will not receive any proceeds from the sale of common stock offered by this Prospectus.
+
+Number of Shares Outstanding 
+
+19,186,648
+
+As of the date of this Prospectus:
+
+Number of Shares Outstanding
+
+After the Offering:
+
+19,186,648 
+
+The Company officers, directors and control persons do not intend to purchase any shares in this offering.
+
+6
+
+Selected financial data
+
+ The following financial information summarizes the more complete historical financial information at the end of this prospectus. Total Expenses are composed of General and Administrative costs and Professional Fees. 
+
+ 
+
+ 
+
+As of March 31, 2013
+
+ 
+
+Balance Sheet 
+
+ 
+ 
+ 
+
+Total Assets 
+
+$ 
+
+521,634
+
+ 
+
+Total Liabilities 
+
+$ 
+
+656,433
+
+ 
+
+Stockholder s Deficit 
+
+$ 
+
+(134,799)
+
+ 
+
+ 
+
+ 
+ 
+ 
+
+ 
+
+ 
+
+Three Months Ended March 31, 2013
+
+ 
+
+Statement of Operations 
+
+ 
+ 
+ 
+
+Revenue 
+
+$ 
+
+571,923
+
+ 
+
+Total Operating Expenses 
+
+$ 
+
+199,698
+
+ 
+
+Net Loss 
+
+$ 
+
+(28,183)
+
+ 
+
+ 
+
+ 
+
+As of December 31, 2012
+
+ 
+
+Balance Sheet 
+
+ 
+ 
+ 
+
+Total Assets 
+
+$ 
+
+305,417
+
+ 
+
+Total Liabilities 
+
+$ 
+
+424,396
+
+ 
+
+Stockholder s Deficit 
+
+$ 
+
+(118,979)
+
+ 
+
+ 
+
+ 
+ 
+ 
+
+ 
+
+ 
+
+Year Ended December 31, 2012
+
+ 
+
+Statement of Operations 
+
+ 
+ 
+ 
+
+Revenue 
+
+$ 
+
+1,095,853
+
+ 
+
+Total Operating Expenses 
+
+$ 
+
+1,814,355
+
+ 
+
+Net Loss 
+
+$ 
+
+(1,395,833)
+
+ 
+
+7
+
+RISK FACTORS
+
+An investment in these securities involves an exceptionally high degree of risk and is extremely speculative in nature. You should carefully consider the risk factors listed below, together with the information contained in this prospectus, any reports we file with the SEC and the documents referred to herein. Following are what is believed are all of the material risks involved if one decides to purchase shares in this offering.
+
+RISKS ASSOCIATED WITH OUR COMPANY:
+
+We are an emerging growth company, and the reduced disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors. 
+
+ 
+
+We are an emerging growth company, as defined in the JOBS Act. For as long as we are an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding advisory say-on-pay votes on executive compensation and shareholder advisory votes on golden parachute compensation. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of $1 billion or more; (ii) The last date of the fiscal year following the fifth anniversary of the date of the first sale of common stock under this registration statement; (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt; and (iv) the date on which we are deemed to be a large accelerated filer under the Exchange Act. We will be deemed a large accelerated filer on the first day of the fiscal year after the market value of our common equity held by non-affiliates exceeds $700 million, measured on October 31. 
+ 
+
+We cannot predict if investors will find our common stock less attractive to the extent we rely on the exemptions available to emerging growth companies. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. 
+
+ 
+
+In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. 
+
+A Company that elects to be treated as an emerging growth company shall continue to be deemed an emerging growth company until the earliest of (i) the last day of the fiscal year during which it had total annual gross revenues of $1,000,000,000 (as indexed for inflation), (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of common stock under this registration statement; (iii) the date on which it has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (iv) the date on which is deemed to be a large accelerated filer as defined by the SEC, which would generally occur upon it attaining a public float of at least $700 million. 
+
+However, we are choosing to opt out of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. 
+
+Because the Company auditors have issued a going concern opinion, there is a substantial uncertainty that it will continue operations in which case one could lose one s investment.
+
+The auditors have issued a going concern opinion because of the Company s recurring losses, negative working capital, stockholder s deficit and the absence of revenue-generating operations. This means that there is substantial doubt that it can continue as an ongoing business for the next twelve months. The financial statements do not 
+
+8
+
+include any adjustments that might result from the uncertainty about its ability to continue in business. As such it may have to cease operations and you could lose your entire investment.
+
+Our Officers and Directors have limited public company experience. The Company s needs could exceed the amount of time or level of experience they may have. This could result in their inability to properly manage Company affairs, resulting in it remaining a start-up company with no revenues or profits, which could cause the loss of one s entire investment. 
+
+ 
+
+The Company business plan does not provide for the hiring of any additional employees other than outlined in its Plan of Operations until sales will support the expense. Until that time the responsibility of developing the Company s business, the offering and selling of the shares through this prospectus and fulfilling the reporting requirements of a public company all fall upon the three officers and two directors. While Jason Foster has experience serving a wide variety of organizations from small startups to Fortune 500 companies, none of our officers and directors have experience in a public company setting, including serving as a principal accounting officer or principal financial officer. Further, they have no experience in complying with the various rules and regulations which are required of a public company, and as a result, they may not be able to operate successfully as a public company, even if the Company s operations are successful. While each of the Company s officers and directors will use their best judgments to resolve all potential conflicts, there is no formulated plan to resolve any possible conflict of interest with their other business activities, and we cannot guarantee that any potential conflicts can be avoided. In the event they are unable to fulfill any aspect of their duties to the Company it may experience a shortfall or complete lack of sales resulting in little or no profits and eventual closure of its business. 
+
+Since the Company has shown a net loss since inception, an investment in the shares offered herein is highly risky and could result in a complete loss of your investment if the company is unsuccessful in its business plans.
+
+Based upon current plans, the Company expects to incur operating losses in future periods as it incurs significant expenses associated with the growth of its business. Further, there is no guarantee that it will be successful in realizing future revenues or in achieving or sustaining positive cash flow at any time in the future. Any such failure could result in the possible closure of its business or force the company to seek additional capital through loans or additional sales of its equity securities to continue business operations, which would dilute the value of any shares you purchase in this offering.
+
+The Company cannot guarantee that it will continue to generate revenues which could result in a total loss of your investment if it is unsuccessful in its business plans.
+
+While the company has generated revenue, which are reported in the financial statements included in this Prospectus, there can be no assurance that it will continue to generate revenues or that revenues will be sufficient to maintain its business. As a result, one could lose all of one s investment if the Company is not successful in its proposed business plans.
+
+Growth and development of operations will depend on the acceptance of the Company s proposed business. If the Company s services are not deemed desirable and suitable for purchase and it cannot establish a customer base, it may not be able to generate future revenues, which would result in a failure of the business and a loss of any investment one makes in the shares.
+
+The acceptance of the Company s lead generation services for its customers is critically important to its success. The Company cannot be certain that the services that it will be offering will be appealing and as a result there may not be any demand for these products and its sales could be limited and it may never realize any revenues. In addition, there are no assurances that if it alters or changes the products it offers in the future that the demand for these new products will develop and this could adversely affect our business and any possible revenues.
+
+9
+
+If demand for the services the Company plans to offer slows, then its business would be materially affected, which could result in the loss of your entire investment. 
+
+Demand for the services which it intends to sell depends on many factors, including: 
+
+ 
+
+ 
+
+ 
+
+the number of clients the Company is able to attract and retain over time.
+
+ 
+
+ 
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+the economy, and in periods of rapidly declining economic conditions, customers may defer services such as ours in order to pay secured debts or debts that must be made in order to remain solvent. 
+
+ 
+
+ 
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+the competitive environment in the lead generation market that may force it to reduce prices below its desired pricing level or increase promotional spending.
+
+ 
+
+ 
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+the ability to anticipate changes in consumer preferences and to meet customers needs for lead generation services in a timely cost effective manner. 
+
+For the long term, demand for the products it plans to offer may be affected by: 
+
+ 
+
+ 
+
+ 
+
+the ability to establish, maintain and eventually grow market share in a competitive environment.
+
+ 
+
+ 
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+delivery of its information globally, geopolitical changes, changes in trading regulations, currency fluctuations, natural disasters, pandemics and other factors beyond our control may increase the cost of items it purchases, create communication issues or render product delivery difficult which could have a material adverse effect on its sales and profitability.
+
+All of these factors could result in immediate and longer term declines in the demand for the services it plans to offer, which could adversely affect its sales, cash flows and overall financial condition. An investor could lose his or her entire investment as a result. 
+
+The loss of the services of the current officers and directors could severely impact the Company business operations and future development, which could result in a loss of revenues and one s ability to ever sell any shares one purchases in this offering.
+
+The performance is substantially dependent upon the professional expertise of the current officers and board of directors. Each has extensive expertise in the lead generation and services industry and the company is dependent on their abilities to develop its business. If they are unable to perform their duties, this could have an adverse effect on company business operations, financial condition and operating results if it is unable to replace them with other individuals qualified to develop and market its business. The loss of their services could result in a loss of revenues, which could result in a reduction of the value of any shares you purchase in this offering as well as the complete loss of your investment.
+
+The Company may not be able to successfully implement its business strategy, which could adversely affect its business, financial condition, results of operations and cash flows. If the Company cannot successfully implement its business strategy, it could result in the loss of your investment. 
+
+Successful implementation of its business strategy depends on factors specific to stock trading platforms and the state of the financial industry and numerous other factors that may be beyond its control. Adverse changes in the following factors could undermine our business strategy and have a material adverse effect on its business, its financial condition, and results of operations and cash flow:
+
+ 
+
+The competitive environment in the lead generation industry that may force us to reduce prices below the optimal pricing level or increase promotional spending;
+
+10
+
+ 
+
+Its ability to anticipate changes in consumer preferences and to meet customers needs for trading products in a timely cost effective manner; and
+
+ 
+
+Its ability to establish, maintain and eventually grow market share in a competitive environment.
+
+There are no substantial barriers to entry into the industry and because the company does not currently have any copyright protection for the services it intends to sell, there is no guarantee someone else will not duplicate its ideas and bring them to market before it does, which could severely limit the Company proposed sales and revenues. If the Company cannot generate sales and revenues, it could result in the loss of your investment.
+
+Since it has no intellectual property protection, unauthorized persons may attempt to copy aspects of its business, including its services or marketing materials. Any encroachment upon the Company corporate information, including the unauthorized use of its brand name, the use of a similar name by a competing company or a lawsuit initiated against it for infringement upon another company's proprietary information or improper use of their copyright, may affect its ability to create brand name recognition, cause customer confusion and/or have a detrimental effect on its business. Litigation or proceedings before the U.S. or International Patent and Trademark Offices may be necessary in the future to enforce the company intellectual property rights, to protect its trade secrets and domain name and/or to determine the validity and scope of the proprietary rights of others. Any such infringement, litigation or adverse proceeding could result in substantial costs and diversion of resources and could seriously harm its business operations and/or results of operations. As a result, an investor could lose his or her entire investment. 
+As the Company intends to be conducting international business transactions, it will be exposed to local business risks in different countries, which could have a material adverse effect on its financial condition or results of operations, which could result in the loss of your investment. 
+
+The Company intends to promote and sell some of its services internationally by way of using overseas outsourced call centers for its offline lead generation services, and we expect to have customers or call centers located in several countries. The Company international operations will be subject to risks inherent in doing business in foreign countries, including, but not necessarily limited to: 
+
+ new and different legal and regulatory requirements in local jurisdictions; 
+
+ potentially adverse tax consequences, including imposition or increase of taxes on transactions or withholding and other taxes on remittances and other payments by subsidiaries; 
+
+ risk of nationalization of private enterprises by foreign governments; 
+
+ legal restrictions on doing business in or with certain nations, certain parties and/or certain products; and 
+
+ local economic, political and social conditions, including the possibility of hyperinflationary conditions and political instability. 
+
+It may not be successful in developing and implementing policies and strategies to address the foregoing factors in a timely and effective manner in the locations where it will do business. Consequently, the occurrence of one or more of the foregoing factors could have a material adverse effect on its base operations and upon its financial condition and results of operations. 
+
+Since its services will be available over the Internet in foreign countries and the Company will have customers residing in foreign countries, foreign jurisdictions may require it to qualify to do business in their country. It will be required to comply with certain laws and regulations of each country in which it conducts business, including laws and regulations currently in place or which may be enacted related to Internet services available to the residents of each country from online sites located elsewhere. 
+
+The company operations in developing markets could expose it to political, economic and regulatory risks that are greater than those it may face in established markets. Further, its international operations may require it to comply with additional United States and international regulations. If the company fails to comply with the 
+
+11
+
+required domestic and international regulations or violates any such regulations, it may not be able to generate sales and revenue necessary to continue its business plans, which could result in the loss of your investment. 
+
+For example, it may be required to comply with the Foreign Corrupt Practices Act, or "FCPA," which prohibits companies or their agents and employees from providing anything of value to a foreign official or agent thereof for the purposes of influencing any act or decision of these individuals in their official capacity to help obtain or retain business, direct business to any person or corporate entity or obtain any unfair advantage. The Company may operate in some nations that have experienced significant levels of governmental corruption. Its employees, agents and contractors, including companies to which it outsources business operations, may take actions in violation of its policies and legal requirements. Such violations, even if prohibited by its policies and procedures, could have an adverse effect on its business and reputation. Any failure by the Company to ensure that its employees and agents comply with the FCPA and applicable laws and regulations in foreign jurisdictions could result in substantial civil and criminal penalties or restrictions on its ability to conduct business in certain foreign jurisdictions, and its results of operations and financial condition could be materially and adversely affected. Finally, any additional regulatory requirements put in place by the United States or any foreign country in which the Company operates may expose the company to additional liability, and require the Company to comply with complex and time consuming regulations. 
+In addition, the Company ability to attract and retain customers may be adversely affected if the reputations of the financial app industry, online brokers as a whole or if particular service providers knowingly relay faulty data. The perception of untrustworthiness within the stock trading industry or of financial apps could materially adversely affect its ability to attract and retain customers. 
+
+Failure of third-party service providers upon which we rely could adversely affect our business and result in the loss of your investment. 
+
+The Company may rely on certain third-party service providers, including data centers, call centers, direct posts, aggregators, publishers, insurance carriers, insurance agencies, back-office systems, Internet and wireless service providers and communications facilities. Any interruption in these third-party services, or deterioration in their performance or quality, could adversely affect our business. If its arrangement with any third party is terminated, it may not be able to find alternative systems or service providers on a timely basis or on commercially reasonable terms. This could have a material adverse effect on its business, financial condition, results of operations and cash flows. 
+
+RISKS ASSOCIATED WITH THIS OFFERING:
+
+The Offering Price of the Company Shares is arbitrary, so there is no guarantee that the price at which you have purchased your shares will remain the same. A significant decrease in the price of our shares could result in the loss of your investment.
+
+The offering price of the company shares has been determined arbitrarily by the Company and bears no relationship to the Company's assets, book value, potential earnings or any other recognized criteria of value.
+
+The trading in the Company shares will be regulated by Securities and Exchange Commission Rule 15g-9 which established the definition of a penny stock. The effective result is that fewer purchasers are qualified by their brokers to purchase its shares, and therefore a less liquid market for the investors to sell their shares. Therefore, you may have a difficult time selling your shares, or you may not be able to sell your shares at all, which could result in the loss of your investment.
+
+The shares being offered are defined as a penny stock under the Securities and Exchange Act of 1934, and rules of the Commission. The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements on broker-dealers who sell our securities to persons other than certain accredited investors who are, generally, institutions with assets in excess of $5,000,000 or individuals with net worth in excess of 
+
+12
+
+$1,000,000 or annual income exceeding $200,000 or $300,000 jointly with spouse), or in transactions not recommended by the broker-dealer. For transactions covered by the penny stock rules, a broker-dealer must make a suitability determination for each purchaser and receive the purchaser's written agreement prior to the sale. In addition, the broker-dealer must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and certain associated persons, and deliver certain disclosures required by the Commission. Consequently, the penny stock rules may make it difficult or impossible for you to resell any shares you may purchase. 
+
+Due to the lack of a trading market for our securities, you may have difficulty selling any shares you purchase in this offering, which could result in the loss of your investment.
+
+There is presently no demand for our common stock and no public market exists for the shares being offered in this prospectus. We plan to contact a market maker immediately following the effectiveness of this Registration Statement to file an application to have our shares quoted on the OTC Electronic Bulletin Board (OTCBB), however, there is no guarantee that a trading market will ever develop. The OTCBB is a regulated quotation service that displays real-time quotes, last sale prices and volume information in over-the-counter (OTC) securities. The OTCBB is not an issuer listing service, market or exchange. Although the OTCBB does not have any listing requirements per se, to be eligible for quotation on the OTCBB, issuers must remain current in their filings with the SEC or applicable regulatory authority. Market Makers are not permitted to begin quotation of a security whose issuer does not meet this filing requirement. Securities already quoted on the OTCBB that become delinquent in their required filings will be removed following a 30 or 60 day grace period if they do not make their required filing during that time. The Company cannot guarantee that our application will be accepted or approved or that its stock will be quoted for sale. As of the date of this filing, there have been no discussions or understandings between Nexus Enterprise Solutions, Inc. or anyone acting on its behalf with any market maker regarding participation in a future trading market for its securities. If no market is ever developed for our common stock, it will be difficult or impossible for you to sell any shares you purchase in this offering. In such case, you may find that you are unable to achieve any benefit from your investment or liquidate your shares without considerable delay, if at all. In addition, if the Company fails to have its common stock quoted on a public trading market, your common stock will not have a quantifiable value and it may be difficult, if not impossible, to ever resell your shares, resulting in an inability to realize any value from your investment.
+
+You will incur immediate and substantial dilution of the price you pay for your shares, which could affect the overall monetary value of your shares. If the value of your shares significantly decreases, you could lose your investment. 
+
+Any investment you make in these shares will result in the immediate and substantial dilution of the net tangible book value of those shares from the $0.25 you pay for them. Upon completion of the offering, the net tangible book value of your shares will be -$0.007 per share, $0.257 less than what you paid for them. 
+
+The company officers and directors will continue to exercise significant control over our operations, which means as a minority stockholder, you would have no control over certain matters requiring stockholder approval that could affect your ability to ever resell any of your shares. If you are not able to resell any shares, it may result in the loss of your investment.
+
+Our executive officers and directors will continue to have a significant influence in determining the outcome of all corporate transactions, including the election of directors, approval of significant corporate transactions, changes in control of the Company or other matters that could affect your ability to ever resell your shares. Their interests may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other stockholders.
+
+13
+
+We may never pay dividends to shareholders, which could reduce the monetary gain you may realize on your investment.
+
+ 
+
+We have not declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings, if any, to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
+
+ 
+
+The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend. If the Company does not pay dividends, the Company s common stock may be less valuable because a return on an investor s investment will only occur if the Company s stock price appreciates.
+
+Because our common stock is not registered under the exchange act, we will not be subject to the federal proxy rules and our directors, executive offices and 10% beneficial holders will not be subject to section 16 of the exchange act. in addition, our reporting obligations under section 15(d) of the exchange act may be suspended automatically if we have fewer than 300 shareholders of record on the first day of our fiscal year. 
+
+ 
+
+Our common stock is not registered under the Exchange Act, and we do not intend to register our common stock under the Exchange Act for the foreseeable future (provided that, we will register our common stock under the Exchange Act if we have, after the last day of our fiscal year, more than 500 shareholders of record, in accordance with Section 12(g) of the Exchange Act; as of March 31, 2013 we have 212 shareholders of record). As long as our common stock is not registered under the Exchange Act, we will not be subject to Section 14 of the Exchange Act, which, among other things, prohibits companies that have securities registered under the Exchange Act from soliciting proxies or consents from shareholders without furnishing to shareholders and filing with the SEC a proxy statement and form of proxy complying with the proxy rules. In addition, so long as our common stock is not registered under the Exchange Act, our directors and executive officers and beneficial holders of 10% or more of our outstanding common stock will not be subject to Section 16 of the Exchange Act. Section 16(a) of the Exchange Act requires executive officers and directors, and persons who beneficially own more than 10% of a registered class of equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of common shares and other equity securities, on Forms 3, 4, and 5 respectively. Such information about our directors, executive officers, and beneficial holders will only be available through periodic reports and any registration statements on
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001561782_sharkreach_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001561782_sharkreach_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..fa36ef1d8fa8b2bac9d29a43fef0227fed4a14c6
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001561782_sharkreach_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in our common stock. You should read the entire prospectus carefully, including the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes included elsewhere in this prospectus, before investing in our common stock. ONLINE SECRETARY, INC. Online Secretary, Inc. ( OLS, we , the Company ) was incorporated in the State of Nevada as a for-profit Company on August 31, 2012 and established September 30th as its fiscal year end. We are a development-stage company that intends to provide online secretarial services through our to-be-developed website. We plan on providing services to our clients such as: booking appointments, scheduling meetings, typing services, phone calls, text messages and or email reminders and confirming appointments. We also intend to provide live-person call service centers for personal and business use. If a person needs to cancel or decline an appointment or invitation but wants to save time or avoid conversations, they can get our secretaries to make the call for them. This service will be available for personal or business use. We plan on generating revenue through monthly subscription fees. We expect to charge depending on the number of services needed. Our planned services packages and the expected costs would be: [6] General Secretarial Services (GSS) Secretarial Services Plus (SSP) Business Secretarial Services (BSS) EXPECTED COST $34.99/mo $44.99/mo $54.99/mo Email and text messages correspondence X X X Phone calls X X X Phone call wake up services X X X Online data backup X X Typing services via phone call X Online data organization X As of the date of this prospectus, we have not yet developed our systems and services. Furthermore, we have no client, we have not yet contacted any possible developer and we have not yet implemented our business model and we have generated no revenues. OLS has no plans to change its business activities or to combine with another business and is not aware of any circumstances or events that might cause this plan to change. OLS believes that the sale of at least 25% of the offered shares herein would allow us to maintain our reporting status with the SEC and implement our Plan of Operations. We expect to start generating revenues only after the successful implementation of our plan of operations. We intend to try to implement our Plan of Operations even if we sell less than 25% of the shares offered herein, but it would most likely not be possible. The Company will retain all the proceeds from this offering, regardless of the amount. The tables below show our estimated use of funds of our plan of operations in the 25%, 50%, 75% and 100% sales scenarios (for more information, see our plan of operations on page 40): 25% of shares sold: GROSS PROCEEDS FROM THIS OFFERING $ 31,250 EXPENSES RELATED TO THIS OFFERING $ 7,765.00 EXPENSES TO MAINTAIN OUR REPORT STATUS FOR 12 MONTHS AFTER EFFECTIVE DATE $ 15,900.00 NET PROCEEDS FROM THIS OFFERING $ 7,585.00 EQUIPMENT AND SOFTWARE PURCHASE $ 2,275.50 HIRE THIRD PARTY TECHNICIANS, WEB DEVELOPERS AND/OR ENGINEERS TO DEVELOP OUR SYSTEMS $ 2,654.75 TESTS $ 606.80 MARKETING $ 1,905.25 OFFICE SUPPLIES, STATIONERY, TELEPHONE, INTERNET $ 151.70 [7] 50% of shares sold: GROSS PROCEEDS FROM THIS OFFERING $ 62,500 EXPENSES RELATED TO THIS OFFERING $ 7,765.00 EXPENSES TO MAINTAIN OUR REPORT STATUS FOR 12 MONTHS AFTER EFFECTIVE DATE $ 15,900.00 NET PROCEEDS FROM THIS OFFERING $ 38,835.00 EQUIPMENT AND SOFTWARE PURCHASE $ 11,650.50 HIRE THIRD PARTY TECHNICIANS, WEB DEVELOPERS AND/OR ENGINEERS TO DEVELOP OUR SYSTEMS $ 13,592.25 TESTS $ 3,106.80 MARKETING $ 9,708.75 OFFICE SUPPLIES, STATIONERY, TELEPHONE, INTERNET $ 776.70 75% of shares sold: GROSS PROCEEDS FROM THIS OFFERING $ 93,750 EXPENSES RELATED TO THIS OFFERING $ 7,765.00 EXPENSES TO MAINTAIN OUR REPORT STATUS FOR 12 MONTHS AFTER EFFECTIVE DATE $ 15,900.00 NET PROCEEDS FROM THIS OFFERING $ 70,085.00 EQUIPMENT AND SOFTWARE PURCHASE $ 21,025.50 HIRE THIRD PARTY TECHNICIANS, WEB DEVELOPERS AND/OR ENGINEERS TO DEVELOP OUR SYSTEMS $ 24,529.75 TESTS $ 5,606.80 MARKETING $ 17,521.25 OFFICE SUPPLIES, STATIONERY, TELEPHONE, INTERNET $ 1,401.70 100% of shares sold: GROSS PROCEEDS FROM THIS OFFERING $ 125,000 EXPENSES RELATED TO THIS OFFERING $ 7,765.00 EXPENSES TO MAINTAIN OUR REPORT STATUS FOR 12 MONTHS AFTER EFFECTIVE DATE $ 15,900.00 NET PROCEEDS FROM THIS OFFERING $ 101,335.00 EQUIPMENT AND SOFTWARE PURCHASE $ 30,400.50 HIRE THIRD PARTY TECHNICIANS, WEB DEVELOPERS AND/OR ENGINEERS TO DEVELOP OUR SYSTEMS $ 35,467.25 TESTS $ 8,106.80 MARKETING $ 25,333.75 OFFICE SUPPLIES, STATIONERY, TELEPHONE, INTERNET $ 2,026.70 We intend to use part of the proceeds to keep our status current with the SEC. OLS will use the funds available to pay for the expenses related to this offering and the expenses to maintain our reporting status for 12 months after the effective date. Our plan of operations is estimated based on the net proceeds from this offer (Gross proceeds less Expenses related to this offering, estimated at a fixed cost of $7,765 and less expenses to maintain our report status for 12 months after effective date, estimated at a fixed cost of $15,900). For more details; see our Use of Proceeds table on page 19. [8] Our officer and director has committed to advancing up to $20,000 for the next twelve months to cover costs to maintain our reporting status current with the SEC as the expenses are incurred and if limited or no funds are available to the Company, regardless of the amount raised through this offering. There is no contract in place or written agreement with Mr. Joshi; the funds expressed in this president s verbal commitment, would be in the form of a non-secured loan with no interest and no fixed repayment date. If we are unable to raise enough funds through this offering, the Company will have to try and seek for additional capital through debt or equity. As of the date of this filing, the Company has generated no revenues and has not entered into any agreement, arrangement or understanding with any third party Company. Failure to raise funds will require the Company to cease operations. Due to the nature of our services, we believe that we can offer our services throughout the USA. Because our sole officer and director reside in India, the negotiations with American individuals and companies will mainly be dealt via telephone and internet. After we are able to successfully implement our Plan of Operations and start generating enough funds, we intend to hire an American president to run our day-to-day operations in the USA, but Mr. Joshi will remain as the company s CEO. We have shared office services located at 112 North Curry Street, Carson City, Nevada, 89703, our telephone number is (775) 321-8234 and our fax number is (775) 546-6224. The Company does not own or rent any property. OLS had raised $12,500 through the sale of its common stock to our sole officer and director as of March 31, 2013, the end of the most recent quarter end. The Company has $109 of cash on hand in the corporate trust account and liabilities of $1,529, represented by expenses accrued during its start-up (described as incorporation costs) and loan from related party. The Company s sole officer and director, Mr. Joshi, owns 100% of the outstanding shares and will own 71.4% after this offering is completed, if all the offered shares are sold. The Company intends to sell shares in India and the United States. The Company has not identified the specific states in which it will sell shares. However, the Company will comply with all securities laws in those states in which it sells shares. OLS is a shell company as defined in Rule 405, because it is a company with nominal operations and it has assets consisting solely of cash and cash equivalents. We have no plans or intention to be acquired or to merge with an operating company. Additionally, there are no plans to enter into a change of control or similar transaction or change the management of the company. There will be illiquidity of any future trading market until the company is no longer considered a shell company. Future investors will have limited ability to resell their shares through registering their transactions under the Securities Act, due to the fact that they would have to meet the conditions of section 4(1) of the Securities Act and restrictions imposed upon the transferability of unregistered shares outlined in Rule 144(i). The Company is an emerging growth company, but the company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to section 107(B) of the Jump Start Business Act of 2012. [9] An issuer remains an emerging growth company until the earliest of: The last day of the fiscal year during which it had total annual gross revenues of $1 billion or more; The last day of the fiscal year following the fifth anniversary of its initial public offering date; The date on which, during the previous three-year period, issued more than $1 billion in non-convertible debt; or The date on which it is deemed to be a large accelerated filer , as defined in section 240.12b 2 of title 17, Code of Federal Regulations, or any successor for that matter. An emerging growth company could be capable of taking advantage of several exceptions, such as: Say-On-Pay. Section 14A(e) of the Exchange Act has been amended to exempt emerging growth companies from the say-on-pay , say-on-pay frequency and say-on-golden parachute requirements that were enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. After cessation of emerging growth company status, if an issuer was an emerging growth company for less than two years after its initial public offering date, it must hold a say-on-pay vote no later than the end of the three-year period beginning on the date it is no longer an emerging growth company. Any other company that has ceased to be an emerging growth company must hold a say-on-pay vote no later than the end of the one-year period beginning on the date it is no longer an emerging growth company. In addition, following cessation of emerging growth company status, a company will become subject to the say-on-pay-frequency and say-on-golden parachute provisions of Rule 14a-21 promulgated under the Exchange Act. Pay-versus-Performance. Section 14(i) of the Exchange Act has been amended to exempt emerging growth companies from the pay versus-performance requirements that were enacted as part of the Dodd-Frank Act. The SEC has not yet finalized the regulations implementing the pay-versus-performance requirements of the Dodd-Frank Act. CEO Pay Ratio Disclosure. Section 953(b)(1) of the Dodd-Frank Act has been amended to exempt emerging growth companies from the requirement to compare CEO compensation to the median of the annual total compensation of all employees of the issuer other than the CEO. The SEC has not yet finalized the regulations implementing the pay ratio disclosure requirements of the Dodd-Frank Act. Compensation Disclosures. Emerging growth companies may comply with the less burdensome executive compensation disclosure requirements applicable to any issuer with a market value of less than $75 million of outstanding voting and nonvoting common equity held by non-affiliates. Currently these provisions are set forth in Item 402(l) through (r) of Regulation S-K as applicable to smaller reporting companies. Financial Statement Requirements. Section 7 of the Securities Act has been revised to require that two years, rather than three years, of audited financial statements be included in any registration statement filed with the SEC by an emerging growth company. Similarly, an emerging growth company need only present its Management s Discussion and Analysis of Financial Condition and Results of Operations for each period for which financial statements are presented rather than the periods required by Item 303 of Regulation S-K. Furthermore, an emerging growth company need not present selected financial data for any period prior to the earliest audited period presented in connection with its initial public offering. In addition, an emerging growth company need not comply with any new or revised financial accounting standard until such date that a company that is not an issuer , as defined in Section 2 of the Sarbanes Oxley Act of 2002 [10] (generally, a nonpublic company), is required to comply with such new or revised accounting standard. Similar changes were also made to Section 13(a) of the Exchange Act. Internal Control over Financial Reporting. Section 404(b) of Sarbanes-Oxley has been amended to exempt emerging growth companies from the requirement to obtain an attestation report on internal control over financial reporting from the issuer s registered public accounting firm. Currently, this requirement is only applicable to accelerated filers and large accelerated filers as defined in Rule 12b-2 promulgated under the Exchange Act. PCAOB Rules. The Public Company Accounting Oversight Board must exclude emerging growth companies from any rules it might adopt addressing mandatory audit firm rotation or requiring a supplement to the auditor s report in which the auditor would provide additional information about the audit and the financial statements of the issuer (a so-called auditor discussion and analysis). No PCAOB rules adopted after the date of enactment of the JOBS Act will apply to an emerging growth company unless the SEC determines that the application of such rules is necessary or appropriate in the public interest, after considering the protection of investors and whether the action will promote efficiency, competition and capital formation. Pursuant to Section 105(c) of the JOBS Act, Section 5 of the Securities Act will be amended to permit an emerging growth company or any person authorized to act on behalf of an emerging growth company to engage in oral or written communications with potential investors that are qualified institutional buyers or institutions that are accredited investors. The Company intends to offer its stock for sale in all jurisdictions that its prospectus is valid in and is not limited to any region or country. The Offering This prospectus covers the offering of 5,000,000 shares of Online Secretary s Common Stock. The offering price is $0.025 per share. Officers, Directors or significant investors own none of the shares being offered. Our sole Officer and Director presently owns 12,500,000 shares of the company. None of these shares owned by our sole officer and director is being offered for sale herein. There is no minimum number of shares that must be sold but the Company will use its best efforts to sell the securities offered. The Company will retain the proceeds from the sale of any of the offered shares. This is our initial public offering and no public market currently exists for shares of OLS common stock. We can offer no assurance that an active trading market will ever develop for our common stock. The Company s sole officer and director will sell the common stock upon effectiveness of this registration statement. [11] Common Stock, par value $0.001, being offered by the Company 5,000,000 shares Offering price per share by the Company. A price, if and when the Company sells the shares of common stock, is set at $0.025. Common Stock to be outstandingbefore the offering 12,500,000 common shares are currently issued and outstanding. Common Stock to be outstandingafter this offering 17,500,000 common shares will be issued and outstanding after this offering is completed. Minimum number of shares to be sold in this offering None. Market for the common shares There is no public market for the common shares. The price per share is $0.025. Upon the effectiveness of this registration statement we intend to arrange for a broker dealer to apply on our behalf for quotation on the Over the Counter Bulletin Board ( OTCBB ). There are no assurances that we can get a broker dealer to apply on our behalf or that our common stock will be approved for quotation on the OTCBB or that, if approved, any meaningful market for our common stock will ever develop. Use of proceeds We estimate that the net proceeds from the sale of shares of our common stock that we are selling in this offering will be approximately $125,000. We expect to use the net proceeds that we receive from this offering for (i) expenses related to this offering; estimated at $7,765 (ii) maintain our annual report status, estimated at $ 15,900 (iii) purchase equipment and software, estimated at $30,400.50, (iv) hire third party technicians estimated to be $35,467.25; (v) elaborate tests, estimated at $8,106.80; (vi) marketing campaign, estimated at $25,333.75; (vii) and administrative expenses estimated to cost $2,026.70. Termination of the offering The offering will conclude at the earlier of the sale of all shares or 90 days after this registration statement becomes effective with the Securities and Exchange Commission. OLS may at its discretion extend the offering for an additional 90 days. Terms of the offering The Company s president and sole director will sell the common stock upon effectiveness of this registration statement. You should rely only upon the information contained in this prospectus. OLS has not authorized anyone to provide you with information different from that which is contained in this prospectus. The Company is offering to sell shares of common stock and seeking offers only in jurisdictions where offers and sales are permitted. Summary Consolidated Financial Data The following summary financial information for the periods stated summarizes certain information from our financial statements included elsewhere in this prospectus. You should read this information in conjunction with Management's Plan of Operations, the financial statements and the related notes thereto included elsewhere in this prospectus. Balance Sheet Data As of March 31, 2013 Total Assets: $ 4,269 Total Liabilities: $ 1,529 Shareholder s Equity: $ 2,740 Statement of Operations Data August 31, 2012 (inception date) through March 31, 2013 Revenue: $ 0.00 Net Loss: ($9,760) Net Loss Per Share: $ 0.00 [12] As shown in the financial statements accompanying this prospectus, OLS has had no revenues to date and has incurred only losses since its inception. The Company has had no operations and has been issued a going concern opinion from their auditors, based upon the Company s reliance upon the sale of its common stock as the sole source of funds for our future operations.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001563315_next_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001563315_next_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..5509164e1c926b2d618cbea50a4a12075af89a56
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+knowledge of such industry and market, which we believe to be reasonable. In addition, while we believe the market opportunity information included in this prospectus is generally reliable and is based on reasonable assumptions, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed under the heading "Risk Factors." SUMMARY This summary provides a brief overview of the key aspects of our offering. It may not contain all of the information that is important to you. You should read the entire prospectus carefully, including the more detailed information regarding our company, the risks of purchasing our common stock discussed under "Risk Factors," and our financial statements and their accompanying notes. In this prospectus, "Zewar", the "Company," "we," "us," and "our," refer to Zewar, unless the context otherwise requires. Unless otherwise indicated, the term "fiscal year" refers to our fiscal year ending October 31. Unless otherwise indicated, the term "common stock" refers to shares of the Company's common stock, par value $0.0001 per share. THE COMPANY Zewar Jewellery, Inc. was incorporated in the State of Nevada on September 26, 2012. Our offices are located at the premises of our President, Mohsin Mulla, who provides such space to us on a rent-free basis at Nizami's Family Shoppee, Sunshine Building, Adade Faria Road, Margao, Goa, India. We are a development stage company with plans to enter into the business of the online retail sale of imitation jewelry. Our product line will consist of middle and high end silver and bronze imitation jewelry which will be either hand crafted in the Indian cottage industry or manufactured to specification. Our president has ample experience in this field. We intend to sell these products through an internet website (the "Website"). We have initially raised $15,000 from the sale of shares to Mohsin Mulla, our sole director and officer. We require additional funding in order to pursue our business objectives and there is no guarantee that we will be successful in this regard. We will need to complete our offering in order to cover legal and audit costs relating to our reporting obligations as a public company estimated at $20,000 (legal fees of $9,000 and audit fees of $11,000), Edgar and XBRL formatting and conversion expenses estimated at $3,000, to develop a website with catalogue and purchase inventory at a cost of about $14,000 and pay marketing costs of $5,000, to cover office and administrative costs of about $3,000 and $2,000 to incorporate an operating subsidiary in India. We will require the funds from this offering in order to fully implement Stage II of our business plan as discussed in the "Plan of Operation" section of this prospectus. Our business plan anticipates that once we have secured the financing and the site is operational, our sales will begin in October 2013. Currently, our President devotes approximately two hours a week to the Company. Our financial statements from inception (September 26, 2012) through October 31, 2012 report no revenues and a net loss of $1,035 and our assets constitute our cash balance of $15,000, which was generated from the issuance of shares to our sole officer and director. As at November 25, 2012, our cash on hand was approximately $15,000 and $1,035 in liabilities. Investors should be aware that our independent auditors have issued an audit opinion which includes a statement expressing substantial doubt as to our ability to continue as a going concern. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next 12 months. Our auditor's opinion is based on us having limited operations, and having limited working capital. Our only source for cash at this time is investments or loans by others in our Company. However, we do not have any written agreements in place for any investments or loans from third parties. We must raise cash to implement our projects and expand our operations. The Company has no or nominal operations and has assets consisting solely of cash and cash equivalents and is, therefore, a shell company as defined by Rule 405 under the Securities Act. The Company's status as a shell company imposes certain restrictions inapplicable to non-shell companies and operates to limit certain transfer of its securities as discussed in detail herein. Investors must be aware that we do not have sufficient capital to independently finance our own plans. We have no plans, arrangements or contingencies in place in the event that we cease operations, in which case investors would likely lose their entire investment. Potential investors should be aware that our President, Mr. Mulla, presently owns 3,000,000 shares, which would represent 48.39% of the issued and outstanding common shares of the Company if the offering closes and all our offered shares are sold. All of these shares are restricted shares. All 3,000,000 shares were purchased by Mr. Mulla at a price of $0.005 per share representing a total cost of $15,000. PENNY STOCK RULES Our common stock will be considered a "penny stock", and subject to the requirements of Rule 15g-9, promulgated under the Securities Exchange Act of 1934, as amended. "Penny stock" is generally defined as any equity security not traded on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser's consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure in connection with any trades involving a stock defined as a penny stock. The required penny stock disclosures include the required delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market. In addition, various state securities laws impose restrictions on transferring "penny stocks" and as a result, investors in the common stock may have their ability to sell their shares of the common stock impaired. THE OFFERING We are offering, on a self-underwritten basis, a total of 3,200,000 shares of the common stock of our Company at a price of $0.01 per share. This is a fixed price offering. In order to close the Offering all of the offered shares must be sold. This Offering of shares by our Company will terminate 180 days from the date of this Prospectus, although we may close the Offering on any date prior if the Offering is fully subscribed. This is an "all or nothing" offering. In the event that all 3,200,000 shares of our common stock are not sold within 180 days from the date of this prospectus, on the 181st day from such date all money received by us will be promptly returned to each subscriber without interest or deduction of any kind. If all of the shares of common stock of our Company offered under this Offering are sold within 180 days from the date of this Prospectus, all money received will be available to us to fund our business and operations, and there will be no return of any funds. The offering price of the common stock has been arbitrarily determined and bears no relationship to any objective criterion of value. The price does not bear any relationship to our assets, book value, historical earnings or net worth. The purchase of the common stock in this offering involves a high degree of risk. The common stock offered in this Prospectus is for investment purposes only and currently no market for our common stock exists. Please refer to "RISK FACTORS" on page 5 and "DILUTION" on page 17 before making an investment in our stock. Securities Being Offered 3,200,000 shares of common stock. Offering Price $0.01 per share Offering Period The shares are being offered for a period not to exceed 180 days from the date of this Prospectus, This is an "all or nothing" offering. In the event we do not sell all of the shares before the expiration date of the offering, all funds raised will be promptly returned to the investors, without interest or deduction. No Public Market There is no public market for our common stock. We cannot give any assurance that the shares being offered will have a market value, or that they can be resold at the offered price if and when an active secondary market might develop, or that a public market for our securities may be sustained even if developed. The absence of a public market for our stock will make it difficult to sell your shares. If in the future a market does exist for our securities, it is likely to be highly illiquid and sporadic. We intend to apply to the OTCBB, through a market maker that is a licensed broker dealer, to allow the trading of our common stock upon our becoming a reporting company. There can be no guarantee that our common stock will be accepted for quotation on the OTCBB. Number of Common Stock Issued and Outstanding Before Offering 3,000,000 shares of our common stock are issued and outstanding as of the date of this prospectus.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001564609_capall_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001564609_capall_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..8e046bf3ebb53c9d44b81f42e9a194a6f40d1e08
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001564609_capall_prospectus_summary.txt
@@ -0,0 +1 @@
+Table of Contents Market Price and Dividends Market Information
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001565347_votorantim_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001565347_votorantim_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001565347_votorantim_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001566026_paulsboro_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001566026_paulsboro_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001566026_paulsboro_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001566097_pbf_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001566097_pbf_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001566097_pbf_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001566897_diamond_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001566897_diamond_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001566897_diamond_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001567802_perkins_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001567802_perkins_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..9ec6f46b6b9d331450ea423fbc030f41a84da357
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001567802_perkins_prospectus_summary.txt
@@ -0,0 +1 @@
+SUMMARY This Prospectus, and any supplement to this Prospectus include "forward-looking statements". To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as "intends", "anticipates", "believes", "estimates", "projects", "forecasts", "expects", "plans" and "proposes". Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the cautionary statements in the "Risk Factors" section beginning on Page 7 of this Prospectus and the "Management's Discussion and Analysis of Financial Position and Results of Operations" section elsewhere in this Prospectus. This summary only highlights selected information contained in greater detail elsewhere in this Prospectus. This summary may not contain all of the information that you should consider before investing in our common stock. You should carefully read the entire Prospectus, including "Risk Factors" beginning on Page 7, and the financial statements, before making an investment decision. All dollar amounts refer to US dollars unless otherwise indicated. Unless otherwise noted, All references to "us", "we", "our" relate to Perkins Oil & Gas Inc, a Nevada corporation. BUSINESS We are an exploration stage company, incorporated in the State of Nevada on May 25, 2012, as a for-profit company, and electing a fiscal year end of June 30. We intend to use the net proceeds from this Offering to further develop our business operations. (See "Business of the Company" and "Use of Proceeds".) We are an exploration stage company with limited revenues and operating history. The principal executive offices are located at 1445 Marpole Avenue #409, Vancouver, B.C. V6H 1S5, Canada. The telephone number is (604)733-5055. We were incorporated to engage in the exploration and development of oil and gas properties. Our first lease is a 25% percent working interest and an 18.75% net revenue interest in 3 acres located in the Perkins Lease in Caddo Pine Island Field that lies in the northern part of Webster Parrish, Louisiana. There is currently one operating oil well on the property. This property is described in "Description of Property" further in this Prospectus. We received our initial funding of $20,001 through the sale of common stock to our officer, J. Michael Page, who purchased 4,000,000 shares of our common stock at $0.005 per share on June 15, 2012. On February 1, 2013 the Company issued a total of 750,000 shares of common stock to one director for cash in the amount of $0.01 per share for a total of $7,500. From inception until the date of this filing we have had limited operating activities. Our financial statements from inception (May 25, 2012) through March 31, 2013 report $3,115 in revenue and a net loss of $27,672. Our independent auditor has issued an audit opinion for Perkins Oil & Gas Inc. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. There is no current public market for our securities. As our stock is not publicly traded, investors should be aware they probably will be unable to sell their shares and their investment in our securities is not liquid. OFFERING We have 4,750,000 shares of common stock issued and outstanding. Through this offering we will register 5,000,000 shares of common stock for offering to the public. These shares represent additional common stock to be issued by us. We will endeavor to sell all 5,000,000 shares of common stock after this registration becomes effective. The price at which we offer these shares is fixed at $0.01 per share for the duration of the offering. We will receive all proceeds from the sale of the common stock unless we are unable to sell the minimum of 2,000,000 shares. Securities Being Offered A minimum of 2,000,000 and a maximum of 5,000,000 shares of common stock. Price per Share $0.01 Offering Period The shares are offered for a period not to exceed 180 days, unless extended by our board of directors for an additional 90 days. Net Proceeds $20,000 to $50,000 Securities Issued and Outstanding 4,750,000 shares of common stock were issued and outstanding as of the date of this prospectus. Registration costs We estimate our total Offering registration costs to be $6,506 You should rely only upon the information contained in this prospectus. We have not authorized anyone to provide you with information different from that which is contained in this prospectus. We are offering to sell shares of common stock and seeking offers to buy shares of common stock only in jurisdictions where offers and sales are permitted. SUMMARY OF OUR FINANCIAL INFORMATION The following table sets forth selected financial information, which should be read in conjunction with the information set forth in the "Management's Discussion and Analysis of Financial Position and Results of Operations" section and the accompanying financial statements and related notes included elsewhere in this Prospectus. STATEMENT OF EXPENSES DATA Period from May 25, 2012 (inception) to March 31, 2013 --------------- Revenues $ 3,115 Total Expenses $37,912 Net Loss $27,672 Net Loss per share $ 0.00 BALANCE SHEET DATA As at March 31, 2013 --------------- Total Assets $ 8,217 Total Liabilities $ 8,388 Stockholders' Equity $ (171) EMERGING GROWTH COMPANY We are an Emerging Growth Company as defined in the Jumpstart Our Business Startups Act. We shall continue to be deemed an emerging growth company until the earliest of: a. the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; b. the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; c. the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or d. the date on which such issuer is deemed to be a `large accelerated filer', as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company we are exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. SMALLER REPORTING COMPANY IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY - THE JOBS ACT We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include: * A requirement to have only two years of audited financial statements and only two years of related MD&A ; * Exemption from the auditor attestation requirement in the assessment of the emerging growth company's internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002; * Reduced disclosure about the emerging growth company's executive compensation arrangements; and * No non-binding advisory votes on executive compensation or golden parachute arrangements. We may take advantage of the reduced reporting requirements applicable to smaller reporting companies even if we no longer qualify as an "emerging growth company." In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act") for complying with new or revised accounting standards. We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
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+PROSPECTUS SUMMARY AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, "WE," "US," "OUR," AND "DRIMEX INC" REFERS TO DRIMEX INC THE FOLLOWING SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK. DRIMEX INC. We are a development stage company in the power sport business. Drimex Inc. was incorporated in Nevada on August 10, 2012. We intend to use the net proceeds from this offering to develop our business operations (See "Description of Business" and "Use of Proceeds"). Our principal executive offices are located at 311 S Division Street, Carson City, NV 89703. Currently we do not have any physical office. Our phone number is (702) 425-5072. From inception until the date of this filing, we have had very limited operating activities. We generated $2000 consultant fee to our client in March 2013. Our financial statements from inception (August 10, 2012) through December 31, 2012, reports no revenues and a net loss of $32. Our independent registered public accounting firm has issued an audit opinion for Drimex Inc. which includes a statement expressing substantial doubt as to our ability to continue as a going concern for the next twelve months. Our ability to continue as a going concern is dependent on our ability to raise additional capital and implement our business plan. Drimex Inc is planning to help customers to obtain power sports vehicles through the auction process, help with shipping and delivery. Also we may obtain inventory of power sports vehicles, parts and accessories from USA auctions and resell them worldwide. Our power sports inventory will include but not limited to motorcycles, all-terrain vehicles (ATV), snowmobiles, Utility Terrain Vehicle (UTV), etc. As of April 2013 we have only European shipping agreement in place. We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act ("JOBS Act"). We will be subject to limited reporting obligations as an emerging growth company and will be subject to limited reporting obligations as mentioned in our risk factors on page 5. Our source of revenue from operating will be fee from customers for helping to obtain power sports vehicles from auctions. We may resell power sport vehicles and power sport accessories from USA based auctions. Also we may make revenue on delivery and shipping from the auctions to customers. To date, we have developed our business plan and entered into agreement with freight agent. Our current monthly burn rate based on our last quarter is $2,133. We estimated it by dividing quarterly expenses by three. Our cash balance is $85 as of June 18, 2013. The present capital will not be sufficient to fund our operation for any period of time at this burn rate. We do not have enough money to pay $9,000 in offering costs. We will not use money from the offering to pay these costs, and will be reliant on loan from our director to pay these fees though he is not obligated to do so. We have generated $2,000 in consulting fees. The $2,000 was paid by two separate clients wishing to buy motorbikes from USA for consulting services including: searching and locating motorbikes in USA market, and shipping consulting from USA to Europe. To implement our plan of operations ($16,000) and pay ongoing legal fee associated with this offering ($9,000) we require a minimum of $25,000 for the next twelve months as described in our Plan of Operations. We will not begin to execute our plan of operation until the offering period is complete which may be a year or more. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. THE OFFERING The Issuer: Drimex Inc. Securities Being Offered: 5,000,000 shares of common stock. We do not plan to sell these securities in the United States. Price Per Share: $0.02 Duration of the Offering: The offering shall terminate on the earlier of (i) the date when the sale of all 5,000,000 common shares is completed; (ii) one year from the date of this prospectus; or (iii) prior to one year at the sole determination of the board of directors. Gross Proceeds $100,000 Securities Issued and Outstanding: There are 5,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held solely by our President and Secretary, Vladimir Nedrygaylo. Subscriptions All subscriptions once accepted by us are irrevocable. Registration Costs We estimate our total offering registration costs to be approximately $9,000. We do not have the cash for this and we will be reliant on our director to pay these fees though he he is not obligated to do so. Risk Factors See "Risk Factors" and the other information in this prospectus for a discussion of the factors you should consider before deciding to invest in shares of our common stock. SUMMARY FINANCIAL INFORMATION The tables and information below are derived from our audited financial statements for the period from August 10, 2012(Inception) to December 31, 2012. FINANCIAL SUMMARY As of December 31, 2012 ($) --------------------- Cash and Deposits 5,068 Total Assets 5,068 Total Liabilities 100 Total Stockholder's Equity 4,968 STATEMENT OF OPERATIONS Accumulated From August 10, 2012 (Inception) to December 31, 2012 ($) --------------------- Total Expenses 32 Net Loss for the Period (32) Net Loss per Share --
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+S-1/A 1 a13-7598_1s1a.htm S-1/A Table of Contents As filed with the Securities and Exchange Commission on May 14, 2013 Registration No. 333-187317 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. 2 TO THE FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Sunnyside Bancorp, Inc. (Exact Name of Registrant as Specified in Its Charter) Maryland 6712 Being applied for (State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Incorporation or Organization) Classification Code Number) Identification Number) 56 Main Street Irvington, NY 10533 (914) 591-8000 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant s Principal Executive Offices) Mr. Timothy D. Sullivan President and Chief Executive Officer 56 Main Street Irvington, NY 10533 (914) 591-8000 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copies to: Kip Weissman, Esq. Steven T. Lanter, Esq. Luse Gorman Pomerenk & Schick, P.C. 5335 Wisconsin Avenue, N.W. Suite 780 Washington, D.C. 20015 (202) 274-2000 James C. Stewart, Esq. Spidi & Fisch, P.C. 1227 25th Street, N.W. Suite 200 West Washington, D.C. 20037 (202) 434-4671 Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: x If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered Proposed maximum offering price per share Proposed maximum aggregate offering price Amount of registration fee Common Stock, $0.01 par value per share 793,500 shares $ 10.00 $ 7,935,000 (1) $ 1,083 (2) (1) Estimated solely for the purpose of calculating the registration fee. (2) Previously paid. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents At or For the Years Ended December 31, 2012 2011 Selected Financial Ratios and Other Data: Performance Ratios: Return on average assets (0.35 )% 0.14 % Return on average equity (4.97 )% 1.97 % Interest rate spread (1) 2.53 % 2.99 % Net interest margin (2) 2.56 % 3.02 % Efficiency ratio (3) 105.63 % 93.97 % Non-interest expense to average total assets 2.72 % 2.74 % Average interest-earning assets to average interest-bearing liabilities 103.61 % 102.78 % Asset Quality Ratios: Non-performing assets to total assets % % Non-performing loans to total loans % % Allowance for loan losses to non-performing loans % % Allowance for loan losses to total loans 0.78 % 0.80 % Capital Ratios: Total capital (to risk-weighted assets) 20.30 % 20.89 % Tier 1 capital (to risk-weighted assets) 19.38 % 19.96 % Tier 1 capital (to average assets) 7.02 % 7.69 % Equity to assets 6.61 % 7.26 % Other Data: Number of full service offices 1 Table of Contents At or For the Three Months Ended March 31, 2013 2012 Selected Financial Ratios and Other Data: Performance Ratios: Return on average assets (ratio of net loss to average total assets) (1) (0.08 )% (0.13 )% Return on average equity (ratio of net loss to average equity)(1) (1.18 )% (1.87 )% Interest rate spread (1) (2) 2.47 % 2.76 % Net interest margin (1)(3) 2.50 % 2.78 % Efficiency ratio (4) 104.53 % 106.75 % Non-interest expense to average total assets (1) 2.65 % 2.90 % Average interest-earning assets to average interest-bearing liabilities 104.74 % 102.10 % Asset Quality Ratios: Non-performing assets to total assets % % Non-performing loans to total loans % % Allowance for loan losses to non-performing loans % % Allowance for loan losses to total loans 0.76 % 0.80 % Capital Ratios: Total capital (to risk-weighted assets) 20.72 % 22.67 % Tier I capital (to risk-weighted assets) 19.77 % 21.66 % Tier I capital (to average assets) 7.23 % 7.45 % Equity to assets 6.72 % 7.04 % Other Data: Number of full service offices 1 Table of Contents PROSPECTUS (Proposed Holding Company for Sunnyside Federal Savings and Loan Association of Irvington) Up to 690,000 shares of Common Stock (Subject to Increase to up to 793,500 shares) Sunnyside Bancorp, Inc., a Maryland corporation and the proposed holding company for Sunnyside Federal Savings and Loan Association of Irvington, is offering shares of common stock for sale in connection with the conversion of Sunnyside Federal Savings and Loan Association of Irvington from the mutual to the stock form of organization. There is currently no established market for our common stock. We expect that our common stock will be quoted on the OTC Bulletin Board upon conclusion of the stock offering. We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012. We are offering up to 690,000 shares of common stock for sale at a price of $10.00 per share on a best efforts basis. We may sell up to 793,500 shares of common stock because of demand for the shares of common stock or changes in market conditions, without resoliciting subscribers. We must sell a minimum of 510,000 shares in order to complete the offering. We are offering the shares of common stock in a subscription offering to eligible current and former depositors of, and certain borrower members of, Sunnyside Federal Savings and Loan Association of Irvington. Shares of common stock not purchased in the subscription offering may be offered for sale to the public in a community offering, with a preference given to residents of our local community. We also may offer for sale shares of common stock not purchased in the subscription offering or community offering to the general public through a syndicated community offering managed by Keefe, Bruyette & Woods, Inc. The minimum number of shares of common stock you may order is 25 shares. The maximum number of shares of common stock that can be ordered by any person in the offering is 7,500 shares ($75,000), and no person, together with an associate or group of persons acting in concert, may purchase more than 15,000 shares ($150,000) in the offering. The offering is expected to expire at 2:00 p.m., Eastern Time, on [expiration date]. We may extend this expiration date without notice to you until [extension date]. The Office of the Comptroller of the Currency may approve a later date, which may not be beyond [final date]. Once submitted, orders are irrevocable unless the offering is terminated or is extended beyond [extension date], or the number of shares of common stock to be sold is increased to more than 793,500 shares or decreased to less than 510,000 shares. If the offering is extended past [extension date], we will resolicit subscribers. You will have the opportunity to confirm, change or cancel your order within a specified period of time. If you do not respond during that period, your stock order will be cancelled and your deposit account withdrawal authorizations will be cancelled or your funds submitted will be returned promptly with interest at 0.10% per annum. If the number of shares to be sold is increased to more than 793,500 shares or decreased to less than 510,000 shares, all funds submitted for the purchase of shares of common stock in the offering will be returned promptly with interest at 0.10% per annum. All subscribers will be resolicited and given an opportunity to place a new order within a specified period of time. Funds received in the subscription and the community offerings will be held in a segregated account at Sunnyside Federal Savings and Loan Association of Irvington and will earn interest at 0.10% per annum until completion or termination of the offering. Keefe, Bruyette & Woods, Inc. will assist us in selling our shares of common stock on a best efforts basis. Keefe, Bruyette & Woods, Inc. is not required to purchase any of the shares of common stock that are being offered for sale. OFFERING SUMMARY Price: $10.00 per Share Minimum Midpoint Maximum Adjusted Maximum Number of shares 510,000 600,000 690,000 793,500 Gross offering proceeds $ 5,100,000 $ 6,000,000 $ 6,900,000 $ 7,935,000 Estimated offering expenses, excluding selling agent commissions $ 516,000 $ 516,000 $ 516,000 $ 516,000 Selling agent commissions (1) $ 240,000 $ 240,000 $ 240,000 $ 240,000 Estimated net proceeds $ 4,344,000 $ 5,244,000 $ 6,144,000 $ 7,179,000 Estimated net proceeds per share $ 8.52 $ 8.74 $ 8.90 $ 9.05 Table of Contents TABLE OF CONTENTS Page SUMMARY 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our securities. You should read the entire prospectus, including Risk Factors and the consolidated financial statements and the related notes before making an investment decision. We, us, our company, our, Clutterbug and the Company refer to Clutterbug Move Management, Inc. and Clutterbug for Seniors, LLC, but do not include the stockholders of Clutterbug Move Management, Inc. Business Overview Clutterbug Move Management, Inc. was incorporated on February 1, 2012 under the laws of the State of Nevada. The Company provides personalized moving assistance and organization support services to the elderly who are seeking a transition to a new location. As a senior citizen move manager, our sole officer and director services a move for the elderly including, but not limited to, space and timetable planning, downsizing belongings, sorting possessions, organizing sales and donations, overseeing the transition of items to storage, packing and unpacking, setting up our client s new residence and arranging and planning with third party movers and storage facilities to assist our clients. For the three and six months ended May 31, 2013, we have $252 and $984 in revenue, respectively. For the period from inception to May 31, 2013, the Company had $9,631 in revenue (as restated Note 3). We performed approximately eighteen engagements in both New York City and Northern New Jersey. Over the next 12 months, our goal is to expand our operations to Westchester County, New York and the Southern Connecticut region, which we believe can be done by increasing our marketing efforts at an approximate cost of $750 initially and an approximate monthly fee of $500. The Company must obtain additional funding before implementing the Company s intended marketing and expansion plan. Victoria Young, our sole officer and director, has agreed to provide the necessary funding to cover these marketing expenses for the next 12 months and beyond until we are engaged in business activities that provide cash flow sufficient to cover our marketing costs. Although we believe our sole officer and director will be able to provide the funds needed to sustain our marketing expenses, we have no legal recourse against her in the event that she is unable to provide funds to the Company. If Ms.Young is unable to provide the necessary funds needed to sustain our marketing and expansion expenses, we may have to cease our business operations and you may lose your entire investment in the Company. Clutterbug for Seniors, LLC was formed on December 29, 2010, under the laws of the State of New Jersey. Pursuant to the Asset Transfer Agreement dated February 1, 2012, the Company acquired all of the outstanding assets and liabilities of Clutterbug for Seniors, LLC. For more detailed information, please refer to the Asset Transfer Agreement filed as Exhibit 2.1 to this Registration Statement on Form S-1. Risks and Key Information About the Company Our ability to successfully operate our business and achieve our goals and strategies is subject to numerous risks as discussed in the section titled Risk Factors, beginning on page 3. In addition to our Risk Factors section, please note the following with respect to the Company: Calculation of Registration Fee Title of Each Class of Securities to be Registered Amount to be Registered (1) Proposed Maximum Offering Price Per Share (2) Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, par value $0.001 per share 750,000 $ 0.02 $ 15,000 $ 2.05 (1) This Registration Statement covers the resale by our selling shareholders of up to 750,000 shares of common stock previously issued to the selling stockholders listed herein. (2) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock is not traded on any national exchange and in accordance with Rule 457; the offering price was determined by the price of the shares that were sold to our stockholders in a private placement memorandum. The price of $0.02 is a fixed price at which the selling security holders may sell their shares. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine. The Company was incorporated on February 1, 2012, has minimal business operations and limited revenues from operations, incurred a net loss for the 2012 fiscal year and posted an overall net loss since the date of inception, December 2010. We are becoming a reporting company to access the benefits we believe the capital markets can provide. By becoming a reporting company, we believe we may have the ability to access additional capital and/or provide liquidity to our investors if a market maker will quote our common stock on the over the counter bulletin board. Further, at this time our operations are not sufficient to pay for the costs of being a reporting company and the $7,500 from the sale of the shares being registered for resale in this amended Form S-1 registration statement are insufficient to pay for the costs of the registration of these shares. However, pursuant to the verbal agreement filed as an exhibit to this amended Form S-1 registration statement, Victoria Young, our sole officer and director, has agreed to provide the necessary funding to cover these expenses for the next 12 months and beyond until we are engaged in business activities that provide cash flow sufficient to cover these costs. Although we believe our sole officer and director will be able to provide the funds needed to sustain our business operations as a reporting company with the SEC, we have no legal recourse against her in the event that she is unable to provide funds to the Company. As disclosed in the Risk Factors section and throughout this amended Form S-1 registration statement, the Company s success depends on the personalized services of our sole officer and director, however: Our sole officer and director does not have experience in managing a public company that is a reporting company with the SEC; Our sole officer and director has no high level accounting or financial reporting education or experience; Our sole officer and director has devoted only part-time status to the company to date; and Our sole officer and director does not have extensive professional relationships in our target markets. Although our sole officer and director has no high level accounting or financial reporting education or experience she has successfully ran our operations since inception and we believe she has the necessary legal and accounting professionals in place to be a compliant reporting company with the SEC. We believe her formal education as disclosed herein provides her with the skills necessary to manage our operations as a reporting company. Our sole officer and director plans to devote her time as needed to the Company. Although she does not have extensive professional relationships in our target markets, we believe we can expand our business operations by marketing senior move management services to the Care Facilities (as defined herein) and the agents who place the elderly in these residences. The Company s common stock will likely be a penny stock as further disclosed herein. At this time, the Company s common stock has no market and may or may not become quoted on the over-the-counter market which will limit the selling shareholders ability to sell their shares and will also limit the Company s ability to raise funds through equity financings or to use its shares as consideration. However, we believe becoming a reporting company with the potential to liquidate our common stock will make us more attractive to accessing the capital markets for our operations. The selling shareholders will offer all or part of their common stock for resale from time to time, and will sell at a fixed price of $0.02 per share for the duration of the offering. The offering in this prospectus is considered to be an indirect primary offering by the company through the selling shareholders, and therefore the selling shareholders are deemed to be underwriters within the meaning of section 2(11) of the Securities Act. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission (the SEC ) becomes effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION ON OCTOBER __, 2013 750,000 Shares of Common Stock CLUTTERBUG MOVE MANAGEMENT, INC. ______________________________________ This prospectus relates to periodic offers and sales of 750,000 shares of our common stock by the selling security holders. The selling shareholders will offer all or part of their common stock for resale from time to time, and will sell at a fixed price of $0.02 per share for the duration of the offering. The offering in this prospectus is considered to be an indirect primary offering by the company through the selling shareholders, and therefore the selling shareholders are deemed to be underwriters within the meaning of section 2(11) of the Securities Act. Our common stock is presently not traded on any market or securities exchange. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority ( FINRA ), nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. There is no assurance that an active trading market for our shares will develop, or, if developed, that it will be sustained. In the absence of a trading market or an active trading market, investors may be unable to liquidate their investment or make any profit from the investment. Additionally, we are a shell company as defined by Rule 12b-2 of the Exchange Act, which status prevents investors from reselling our shares pursuant to Rule 144 unless and until 12 months after we are no longer considered a shell company and all the conditions of Rule 144(i) are met. We are an emerging growth company as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements. Investing in our common stock involves risks. See Risk Factors beginning on page 3 to read about factors you should consider before buying shares of our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is ____________, 2013 Implications of Being an Emerging Growth Company We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include: A requirement to have only two years of audited financial statements and only two years of related MD Exemption from the auditor attestation requirement in the assessment of the emerging growth company s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002; Reduced disclosure about the emerging growth company s executive compensation arrangements; and No non-binding advisory votes on executive compensation or golden parachute arrangements. We have already taken advantage of these reduced reporting burdens in this prospectus, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the Exchange Act ). In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the Securities Act ) for complying with new or revised accounting standards. We are choosing to opt out of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. The Company, the officer and director, or any Company promoters or their affiliates do not intend for the Company, once it is reporting, to be used as a vehicle for a private company to become a reporting company. We do not believe that we are a blank check company because we have no plans or intentions to engage in a merger or acquisition with an unidentified company, companies, entity or person unless we believe it will enhance, improve or grow our business operations. At this time, our objective is to increase our business operations by marketing our services and performing our job with quality and care to maximize value for our shareholders. TABLE OF CONTENTS PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 4
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+Summary of
+ Prospectus
+
+ 
+ 3
+
+ 
+ 
+ 
+
+ 
+ General information about
+ our Company
+
+ 
+ 3
+
+ 
+ 
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+
+ 
+ The Offering
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+ 6
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+ 
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+ Risk Factors
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+ 7
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+ Risks associated with
+ Resort Savers, Inc.
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+ 7
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+ Risks associated with this
+ offering
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+ 12
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+ Use of
+ Proceeds
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+ 18
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+ Determination of Offering
+ Price
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+ 19
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+ Dilution
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+ 19
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+ Selling Security
+ Holders
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+ 20
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+ Plan of
+ Distribution
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+ 20
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+ 
+ 
+ 
+
+ 
+ Shares offered by the
+ Company will be sold by our Officers and Directors
+
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+ 20
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+ 
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+
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+ Terms of the
+ Offering
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+ 
+ 21
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+ Offering
+ proceeds
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+ 21
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+ 
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+ Procedures and requirements
+ for subscription
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+ 21
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+ 
+ 
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+ Right to reject
+ subscriptions
+
+ 
+ 21
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+ 
+ 
+ Description of Securities
+ to be Registered
+
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+ 21
+
+ 
+ 
+ Interest of Named Experts
+ and Counsel
+
+ 
+ 22
+
+ 
+ 
+ Information with Respect to
+ the Registrant
+
+ 
+ 22
+
+ 
+ 
+ 
+
+ 
+ Description of
+ business
+
+ 
+ 22
+
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+ 
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+
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+ Description of
+ property
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+ 
+ 25
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+ Legal
+ proceedings
+
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+ 25
+
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+ 
+
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+ Market price of and
+ dividends of the registrant s common equity and related stockholder
+ matters
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+ 25
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+
+ 
+ Financial statements and
+ selected financial data
+
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+ 27
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+ Management s discussion and
+ analysis of financial condition and results of operations
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+ 27
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+ Changes in and
+ disagreements with accountants on accounting and financial
+ disclosure
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+ 33
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+ Quantitative and
+ qualitative disclosures about market risk
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+ 33
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+ Directors and executive
+ officers
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+ 33
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+ Executive
+ compensation
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+ 35
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+ Security ownership of
+ certain beneficial owners and management
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+ 36
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+ Certain relationships and
+ related transactions
+
+ 
+ 37
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+ Material
+ Changes
+
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+ 37
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+ 
+ 
+ Incorporation of Certain
+ Information by Reference
+
+ 
+ 37
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+ 
+ 
+ Disclosure of Commission
+ Position on Indemnification for Securities Act Liabilities
+
+ 
+ 37
+
+ 
+ 
+ Financial
+ Statements
+
+ 
+ 39
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+ 
+
+Until _____, 2013, all dealers that effect transactions
+in these securities, whether or not participating in this offering, may be
+required to deliver a prospectus. This is in addition to the dealers obligation
+to deliver a prospectus when acting as underwriters and with respect to their
+unsold allotments or subscriptions.
+
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001572552_asterias_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001572552_asterias_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary provides an overview of selected information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in our common stock. You should carefully read this prospectus and the registration statement of which this prospectus is a part in their entirety before investing in our securities, including the information discussed under Risk Factors and our financial statements and the related notes thereto included elsewhere in this prospectus. Unless otherwise indicated herein, the terms we, our, or us, refer to Asterias Biotherapeutics, Inc. Asterias Biotherapeutics, Inc. Overview We are a biotechnology company focused on the emerging field of regenerative medicine. Our core technologies center on stem cells capable of becoming all of the cell types in the human body, a property called pluripotency. We plan to develop therapeutic products from pluripotent stem cells to treat diseases or injuries in a variety of medical fields, including neurology, oncology, cardiology, metabolic diseases, ophthalmology, orthopedics, and blood and vascular diseases. Regenerative medicine refers to an emerging field of therapeutic product development that may allow all human cell and tissue types to be manufactured on an industrial scale. This new technology is made possible by the isolation of human embryonic stem ( hES ) cells, and by the development of induced pluripotent stem ( iPS ) cells which are created from regular cells of the human body using technology that allows adult cells to be reprogrammed into cells with pluripotency much like hES cells. hES and pluripotent iPS cells have the unique property of being able to branch out into each and every kind of cell in the human body, including the cell types that make up the brain, the blood, the heart, the lungs, the liver, and other tissues. Unlike adult-derived stem cells that have limited potential to become different cell types, pluripotent stem cells may have vast potential to supply an array of new regenerative therapeutic products, especially those targeting the large and growing markets associated with age-related degenerative disease. Unlike pharmaceuticals that require a molecular target, therapeutic strategies in regenerative medicine are generally aimed at regenerating affected cells and tissues, and therefore may have broader applicability. We believe that regenerative medicine represents a revolution in the field of biotechnology with the promise of providing therapies for diseases previously considered incurable. On October 1, 2013, we acquired certain assets from Geron Corporation that had been used in Geron s hES cell research and development programs in exchange for 6,537,779 Series A Shares that we issued to Geron, and we also acquired certain assets from our parent corporation, BioTime, Inc. ( BioTime ) in exchange for 21,773,340 Series B Shares, and warrants to purchase 3,150,000 Series B Shares, that we issued to BioTime (the Asset Contribution ). The acquisition of the Geron assets and the assets from BioTime was completed under the terms of an Asset Contribution Agreement, dated January 4, 2013 (the Asset Contribution Agreement ), to which we, Geron and BioTime were the parties. The assets we acquired from Geron include: certain patents and patent applications and all related active prosecution cases, trade secrets, know-how and certain other intellectual property rights, and all of Geron s goodwill with respect to the technology of Geron directly related to the research, development and commercialization of certain products and know-how related to hES cells; certain biological materials and reagents (including master and working cell banks, original and seed banks, and research, pilot and current good manufacturing practices ( cGMP ) grade lots and finished product); certain laboratory equipment; certain contracts; certain books, records, lab notebooks, clinical trial documentation, files and data; Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 of the Securities Act of 1933 check the following box. o Table of Contents certain regulatory filings for clinical trials for the following product candidates (the Clinical Trials ): GRNOPC1 for spinal cord injury, including the investigational new drug applications submitted to the United States Food and Drug Administration ( FDA ) for Geron s Phase I safety study of oligodendrocyte progenitor (GRNOPC1) cells in patients with neurologically complete, subacute spinal cord injury, and long term follow up of subjects who received GRNOPC1; and VAC1 for acute myelogenous leukemia ( AML ), including a Phase I/II study of active immunotherapy with GRNVAC1, autologous mature dendritic cells transfected with mRNA encoding human telomerase reverse transcriptase (hTERT), in patients with AML in complete remission; and certain abandoned or inactive patents and abandoned or inactive patent applications. In addition, we received from Geron an exclusive sublicense under certain patents owned by the University of Colorado s University License Equity Holdings, Inc. relating to telomerase (the Telomerase Sublicense ). The Telomerase Sublicense entitles us to use the inventions described in the sublicensed patents in the development of certain immunological treatments for cancer. Under the Telomerase Sublicense, we paid Geron an up-front license fee and will pay a small annual license maintenance fee, and a small royalty on sales of any products that we may develop and commercialize using the sublicensed patents. We assumed the obligations and liabilities of Geron and its affiliates relating to the assets we acquired from them and attributable to periods, events or circumstances after the date of the acquisition, and the obligations of Geron and its affiliates to be performed under the contracts that Geron assigned to us. We also assumed certain patent interference proceedings. See Business- Patents and Trade Secrets-- ViaCyte Patent Interference Proceedings. We will reimburse Geron for certain costs incurred after June 30, 2013 relating to the maintenance or prosecution of patents and patent applications assigned to us. We assumed all obligations and liabilities of Geron arising from the Clinical Trials, including the obligation to obtain information and prepare reports to the FDA about the health of patients who participated in the Clinical Trials, and liabilities to patients that might arise from the Clinical Trials. The assets we acquired from BioTime include: a quantity of five human hES cell lines produced by BioTime s subsidiary ES Cell International Pte Ltd ( ESI ) under cGMP sufficient to generate master cell banks, and non-exclusive, world-wide, royalty-free licenses to use those cell lines and practice under certain patents pertaining to stem cell differentiation technology for any and all uses; 8,902,077 BioTime common shares; warrants to subscribe for and purchase 8,000,000 additional BioTime common shares (the BioTime Warrants ) exercisable for a period of five years at a price of $5.00 per share, subject to pro rata adjustment for certain transactions; forgiveness of a loan in the amount of $5,000,000; 10% of the shares of common stock of BioTime s subsidiary OrthoCyte Corporation ( OrthoCyte ) issued and outstanding as of January 4, 2013; and 6% of the ordinary shares of BioTime s subsidiary Cell Cure Neurosciences, Ltd. ( Cell Cure Neurosciences ) issued and outstanding as of January 4, 2013. We have subsequently entered into a Materials Transfer Agreement with BioTime through which we have acquired the non-exclusive right to use certain hydrogel formulations for research purposes, and an option for a period of 36 months to negotiate a non-exclusive sub-license for use of BioTime s hydrogels in neurological, cardiovascular and orthopedic human cell therapy applications. Table of Contents Royalty Agreement In connection with our acquisition of the stem cell assets from Geron, we entered into a Royalty Agreement with Geron pursuant to which we agreed to pay them a 4% royalty on net sales (as defined in the Royalty Agreement), by us or any of our affiliates or sales agents, of any products that we develop and commercialize that are covered by the patents Geron contributed to us. In the case of sales of such products by a person other than us or one of our affiliates or sales agents, we will be required to pay Geron 50% of all royalties and cash payments received by us or by our affiliate in respect of a product sale. Series A Distribution Under the Asset Contribution Agreement, Geron has agreed, subject to applicable legal requirements and certain other limitations, to distribute to its stockholders, on a pro rata basis, the 6,537,779 Series A Shares it received in exchange for the assets it contributed to us in the Asset Contribution (the Series A Distribution ). Under the Asset Contribution Agreement, fractional shares will not be distributed in the Series A Distribution, and instead will be aggregated and sold for cash, and the net cash proceeds of the sale will be distributed ratably to Geron s stockholders who would otherwise be entitled to receive fractional shares. Also, in lieu of Geron distributing the Series A Shares in jurisdictions where it would be unlawful to do so, and in certain other excluded jurisdictions in which Geron stockholders hold less than 20,000 shares of Geron common stock in the aggregate, the Series A Shares that the Geron stockholders who reside in those jurisdictions would otherwise receive will instead be sold for cash and the net cash proceeds will be distributed ratably to those stockholders. BioTime Warrants Distribution Following the Series A Distribution, pursuant to the terms of the Asset Contribution Agreement, we are required to distribute to the holders of the Series A Shares, on a pro rata basis, the 8,000,000 BioTime Warrants that we received in the Asset Contribution (the BioTime Warrants Distribution ). As a result of the BioTime Warrants Distribution, we will not derive any future economic value from the BioTime Warrants and instead the value of the BioTime Warrants will benefit the holders of Series A Shares who receive the BioTime Warrants. Our Strategic Advantages By acquiring Geron s stem cell assets, we will have the use of cell lines and other biological materials, patents, and technology developed by Geron over 12 years of work focused in the following complementary areas: The establishment of cell banks of undifferentiated hES cells produced under cGMP and suitable for the manufacture of differentiated cells for human therapeutic use; The development of scalable differentiation methods which convert, at low cost, undifferentiated hES cells into functional cells suitable for human therapeutic purposes that can be stored and distributed in the frozen state for off-the-shelf use; The development of regulatory paradigms that we believe will be sufficient to satisfy both U.S. and European regulatory authority requirements to begin human clinical testing of products made from hES cells; and The continuous filing and prosecution of patents covering inventions to protect commercialization rights, as well as consummating in-licenses to enable freedom to operate in a variety of fields. Products Under Development We acquired from Geron a significant portfolio of patents and patent applications, cell lines, and hES cell technology and know-how related to potential therapeutic products in various stages of development. Two of the products under development have already been used in early stage clinical trials. See Business Product Candidates in this prospectus for a description of the various product candidates and the stages of development that they are in. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Securities Exchange Act of 1934. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company o CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Proposed Maximum Aggregate Offering Price(1) Amount of Registration Fee(2) Units Consisting of Series B Common Stock and Redemption Rights $ 15,000,000 $ 1,932.00 Series B Common Stock, par value $0.0001 per share Underlying Units -- -- Redemption Rights Underlying Units -- -- Warrants to Purchase Series B Common Stock(3) $ 562,500 $ 72.45 Series B Common Stock, par value $0.0001 per share(4) -- -- Series A Common Stock, par value $0.0001 per share (5) -- -- Total Registration Fee $ 2,004.45 (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the Securities Act ). Includes the offering price of additional shares that the underwriters have the option to purchase. (2) Calculated pursuant to Rule 457(o) under the Securities Act based on an estimate of the proposed maximum aggregate offering price. (3) Issuable to the underwriter. No registration fee pursuant to Rule 457(g) under the Securities Act. (4) Issuable upon the exercise of Warrants to be issued to the Underwriter. Also includes an indeterminable number of additional shares of Series B common stock that may become issuable upon exercise of Warrants pursuant to the anti-dilution provisions of the Warrants, and an equal number of additional shares of Series A common stock that may become issuable upon exercise of Warrants, pursuant to the anti-dilution provisions of the Warrants, if the Series B common stock is converted into Series A common stock. Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(g) of the Securities Act. The Warrants are exercisable at a per share price equal to 125% of the public offering price of a Unit. (5) Issuable upon conversion of the Series B common stock into Series A common stock. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its Effective Date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents The product candidates under development from various cell types that we acquired from Geron are summarized in the following table: Product Candidate Description Target Market Estimated Number of Potential Patients Status OPC1 Glial Cells Spinal Cord Injury 12,000 new cases per year in U.S. Phase I Trial initiated in U.S. 5 Patients treated no serious adverse events related to the OPC1 drug product to date. Multiple Sclerosis ( MS ) 180,000 new cases per year in U.S. Proof of principle achieved in animal models. Canavan's Disease(1) Rare Proof of principle achieved in animal models. Stroke 800,000 new cases per year in U.S. Pre-clinical research. VAC1 - Autologous Monocyte Derived Dendritic Cells (infused cells derived from the treated patient) Cancer Prostate: 240,000 new cases per year in U.S. Acute myelogenous leukemia: more than 12,000 new cases per year in U.S. Phase I study in metastatic prostate cancer completed (Journal of Immunology, 2005, 174: 3798-3807). Phase I/II study in acute myelogenous leukemia completed. Manuscript in preparation. VAC2 Dendritic Cells Lung Cancer 226,000 new cases per year in U.S. Cells derived and fully characterized (all normal cell functions verified in vitro). Multiple Myeloma 22,000 new cases per year in U.S. Scalable manufacturing methods under development. Prostate Cancer 240,000 new cases per year in U.S. Proof of concept established in multiple human in vitro systems. CHND1 Chondrocytes Osteoarthritis 25 million total patients in U.S. Cells derived and partly characterized (most, not all, normal cell functions verified in vitro). Early proof of concept in two animal models of osteoarthritis. Degenerative Disk Disease 400,000 new spinal fusion cases per year in U.S. Pre-clinical research. CM1 - Cardiomyocytes Heart Failure 6 million total patients in U.S. Cells derived and fully characterized (all normal cell functions verified in vitro(2)). Myocardial Infarction 900,000 new cases per year in U.S. Proof of concept in three animal models of disease. Scalable manufacturing established. First in man clinical trial designed. IC1 Islet Cells Type 1 and some Type 2 Diabetes 5 million total insulin dependent patients in U.S. Cells derived and partly characterized (most, not all normal cell functions verified in vitro). Proof of concept in rodent diabetes model. Scalable manufacturing methods under development. (1) Canavan's Disease is a congenital neurological degenerative disease in which the growth of the myelin sheath surrounding nerves is inhibited resulting in mental retardation, loss of motor function, abnormal muscle tone, poor head control and enlarged head. Death usually occurs before age 4. (2) In vitro means in tissue culture dishes. The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Preliminary Prospectus Dated November 27, 2013 PROSPECTUS ASTERIAS BIOTHERAPEUTICS, INC. __________ Units, Each Consisting of One Share of Series B Common Stock and One Redemption Right We are offering ________ shares of our Series B common stock, par value $0.0001 per share ( Series B Shares ) and _______ redemption rights together in units, with each unit consisting of one Series B Share and one redemption right (a Unit ). The Series B Shares and redemption rights will immediately separate after purchase and will be issued separately. Each redemption right entitles the holder to sell one Series B Share to us during a redemption period commencing 30 days prior to the third anniversary of the completion of this offering and ending at 5:00 p.m. New York time on ______, 201__ (the expiration time ). If a Series B Share is redeemed through the exercise of a redemption right, we will pay the Series B Share holder either an amount of cash, a number of common shares, no par value, of our parent company, BioTime, Inc. ( BioTime ) or a combination of such shares and cash, at our option, with a value equal to the public offering price of a Unit ($___, or the redemption price ). The redemption rights will expire on the earlier of (a) the expiration time, and (b) the earliest date, if any, on which the closing price of the Series B Shares as reported on the NYSE MKT, any other national securities exchange, or the OTC Bulletin Board has been at least 150% of the redemption price, as adjusted, for 10 consecutive trading days. Following this offering, if we elect to convert all of our Series B Shares into shares of our Series A common stock, par value $0.0001 per share ( Series A Shares ), as described elsewhere in this prospectus, the redemption rights will permit the redemption of Series A Shares at the redemption price. See Description of Securities. Our Series B Shares are not presently quoted or listed for trading. We have applied to list the Series B Shares on the NYSE MKT under the symbol AST but there is no assurance that our listing application will be approved. We intend to arrange for prices of the redemption rights to be quoted on the OTC Bulletin Board under the symbol ____ no later than the completion of this offering. The units will not be listed for trading. There is presently no market for the Series B Shares or redemption rights and there is no assurance that a market will developed or be sustained. Per Unit Total Public Offering Price $ $ Underwriting Discounts and Commissions $ $ Proceeds Before Expenses to Us $ $ We have granted the underwriter an option for a period of up to 30 days to purchase up to an additional [_____] units from us, at the public offering price, less the underwriting discounts and commissions to cover over-allotments, if any. These securities involve a high degree of risk. See Risk Factors beginning on page 16. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. The underwriter expects to deliver the Units on or about__________________ , 2013 through the book-entry facilities of The Depository Trust Company. Table of Contents Certain Uncertainties and Risks The cost and time required to develop products from the assets we acquired in the Asset Contribution is not presently known with certainty due to many factors including the following: the functional state of the cells, cell lines and other biological reagents transferred to us cannot be determined until they are tested in an appropriate laboratory setting by qualified scientific personnel using validated equipment, which may not be completed until the first quarter of 2014. The functionalities of the cells were within specification at the time of initial manufacturing and subsequent storage. However, the cells have remained in storage (under GMP conditions) for more than two years. Therefore, all the functional tests need to be repeated to verify that the cells remain within specification after the two year period of frozen storage. the views of the FDA and comparable foreign regulatory agencies on the pre-clinical product characterization studies required to submit an investigational new drug application ( IND ) in order to initiate human clinical testing of potential therapeutic products; the inherent uncertainty of laboratory research and any clinical trials that we may conduct; the amount of capital that we will have for our development programs, including potential sources of additional capital through research grants or funded collaborations with third parties; and the availability and recruitment of qualified personnel to carry out the analyses and evaluations described above. We have commenced our efforts to obtain project funding, manufacturing expertise, and clinical trial management for the VAC2, CHND1 and CM1 programs by initiating discussions with certain third parties that either had agreements with Geron related to, or had expressed an interest in participating in, the development of therapeutic products with those cell lines and related technologies. The extent and pace of the work we can do to develop product candidates in those three programs will depend in large part on the consummation of agreements for one or more of those potential collaborations. Our discussions with the third parties are in the early stages and there is no assurance that they will lead to any agreements. We may also pursue discussions with other third parties for financial, manufacturing, or clinical trial management, or other co-development arrangements for those programs. We have applied for a Strategic Partnership 3 Track A award from the California Institute for Regenerative Medicine ( CIRM ) to support a Phase I/IIa dose escalation clinical trial of OPC1 in subjects with neurologically complete cervical spinal injury. There can be no assurance that we will receive this award from CIRM. We may also use the acquired assets, along with technology that we may develop ourselves or that we may acquire from third parties to pursue the development of other products. Our product development efforts may be conducted by ourselves alone or in collaboration with others if suitable co-development arrangements can be made. Burrill Securities LLC The date of this prospectus is __________, 2013. Table of Contents We will also face other significant risks in operating our business, in addition to the factors listed above related to our plans to develop therapeutic products derived from hES cells. Among these additional risks are: The new medical products and technologies that we will attempt to develop might not prove to be safe and efficacious in human medical applications. Many of the products and technologies that we will seek to develop have not been applied in human medicine and have only been used in laboratory studies in vitro or in animals. Only two of the product candidates that we have acquired have been used in clinical trials, and those were early stage trials involving only a small number of patients. No product based on hES or iPS technology has been approved for use in medical applications to date. If we are successful in developing a new technology or product, refinement of the new technology or product and definition of the practical applications and limitations of the technology or product, may take years and require the expenditure of large sums of money. Our products may be difficult to manufacture on a commercial scale. hES derived therapeutic cells have only been produced on a small scale and not in quantities or at levels of purity and viability that will be needed for wide scale commercialization. Our hES cell or other cell based products, to the extent any of them receive regulatory approval, are likely to be more expensive to manufacture on a commercial scale than most other drugs on the market today. The high cost of manufacturing a product will require that we charge our customers a high price for the product in order to cover our costs and earn a profit. If the price of our products is too high, hospitals and physicians may be reluctant to purchase our products and third party payors may be reluctant to cover such products, especially if lower priced alternative products are available. Physicians and hospitals may be reluctant to try any new products that we develop and for which we receive regulatory approval due to the high degree of risk associated with the application of new technologies and products in the field of human medicine. We do not have the ability to independently conduct clinical trials required to obtain regulatory approvals for our therapeutic product candidates and we will need to rely on third parties to conduct any clinical trials that we may undertake for our products. We may need to issue additional equity or debt securities in order to raise additional capital needed to pay our operating expenses. These and other risk factors are discussed in more detail under "Risk Factors". Patents and Patent Applications The patent portfolio that we have acquired includes over 400 patents and patent applications relating to hES cell-based product opportunities. This portfolio consists primarily of patents and patent applications previously owned by Geron, and also includes patent families previously licensed to Geron by third parties, such as patent rights relevant to oligodendrocyte progenitor cells licensed from the University of California. The patents and patent applications cover a number of cell types that can be made from hES cells, including hepatocytes (liver cells), cardiomyocytes (heart muscle cells), neural cells (nerve cells, including dopaminergic neurons and oligodendrocytes), chondrocytes (cartilage cells), pancreatic islet cells, osteoblasts (bone cells), hematopoietic cells (blood-forming cells) and dendritic cells. Also included in the patent portfolio are technologies for growing hES cells without the need for cell feeder layers, and novel synthetic growth surfaces. We believe that this is one of the largest and broadest portfolios of patents related to hES and iPS technology owned by any company or other institution. In addition, as a subsidiary of BioTime, we will have opportunities to acquire licenses to use patents, patent applications and know-how in the hES and iPS fields owned by or licensed to BioTime and its other subsidiaries. BioTime and its subsidiaries own or have licensed rights to more than 350 patents in the hES and iPS fields. Except for licenses described in this prospectus, the specific patents that we may license or sublicense from BioTime and its other subsidiaries, and the financial and other terms and conditions of those licenses and sublicenses, have not yet been determined. Table of Contents Our Strategy We are building the leading biopharmaceutical company focused on the acquisition, development and commercialization of cell therapies in the neurology, oncology, orthopedics, and cardiovascular markets. The key elements of our strategy include: Advancing our initial programs through clinical development. We are currently evaluating potential additional clinical trials of OPC1 in spinal cord injury, as well as potential other indications, including Multiple Sclerosis and stroke. We have acquired a Phase II/III ready cancer vaccine (VAC1) with an opportunity to continue the development of a second generation approach using dendritic cells derived from hES cells (VAC2). Focusing our resources on developing therapies for indications with significant unmet medical need. Our targets markets of spinal cord injury, heart failure, diabetes, osteoarthritis and cancer all have a high estimated number of potential patients. Selectively forming strategic alliances to augment our expertise and accelerate development and commercialization. We will seek partners who can bring manufacturing capability, therapeutic expertise, development and commercialization capabilities and project funding to allow us to maximize the potential of our regenerative medicine assets. Maintaining scientific and intellectual leadership in the cell therapy field. We will continue to conduct research in the cell therapy field to better understand this new area of medicine and develop potential additional applications. This includes building on our strong network of key opinion leaders and securing additional intellectual property rights to broaden our existing proprietary asset estate. Our Leadership Our executive team has more than 140 years of collective experience in the field of regenerative medicine, including significant operational and financial experience, which we believe is the ideal combination of talent to execute our strategy. In addition, our experienced board of directors provides significant support and guidance in all aspects of our business. Our executive officers, chairman of the board and other key employees are: Thomas B. Okarma, Ph.D., M.D., our President and Chief Executive Officer, is an internationally renowned pioneer and expert in stem cell research. Dr. Okarma s years of experience in senior management of biotechnology companies, including as CEO of Geron, and his understanding of the technologies that we have acquired from Geron through the Asset Contribution, make Dr. Okarma uniquely qualified to serve as our Chief Executive Officer and as a member of our Board of Directors. Alfred D. Kingsley, our Chairman of the Board, has a long career in corporate finance and mergers and acquisitions, including substantial experience in helping companies to improve their management and corporate governance, and to restructure their operations in order to add value for shareholders. Mr. Kingsley has been instrumental in structuring our initial equity financings, and in negotiating the Asset Contribution Agreement with Geron and is, along with entities that he controls, currently BioTime s largest shareholder. Jane S. Lebkowski, our President of Research and Development, has 25 years of experience in research & development at Applied Immune Sciences, Rhone Poulenc Rorer, and Geron and has co-authored numerous scientific publications. Table of Contents Katharine Spink, Ph.D., our Vice President and Chief Operating Officer, has 12 years of experience in biotech strategy, business development & program management and operations at Geron and McKinsey & Co. Kirk Trisler, Ph.D., our Vice President of Product Development, has 20 years of experience in biologics product development & manufacturing at Geron, Genentech, and Genitope. Edward D. Wirth, III, M.D., Ph.D., our Chief Translational Officer, has 25 years of experience in translational research of cell therapies and medical devices at University of Chicago, Geron, and InVivo. Additional Information We were incorporated in September 2012 under the name BioTime Acquisition Corporation in the state of Delaware. We changed our name to Asterias Biotherapeutics, Inc. in March 2013. Our principal executive offices are located at 230 Constitution Drive, Menlo Park, California 94025. Our telephone number is 650-433-2900. We currently maintain an Internet website at www.biotimeinc.com/asterias-biotherapeutics. We have not incorporated by reference into this prospectus the information in, or that can be accessed through, our website, and you should not consider it to be a part of this prospectus. We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012. We will remain an "emerging growth company" until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission, or the SEC. We refer to the Jumpstart Our Business Startups Act of 2012 herein as the "JOBS Act," and references herein to "emerging growth company" shall have the meaning associated with it in the JOBS Act. The Offering Securities Offered Up to ______ units. Each unit will consist of one share of Series B common stock and one redemption right. Description of Redemption Rights A holder of a redemption right may require us to redeem one share of Series B common stock per redemption right held for: an amount of cash equal to the redemption price; BioTime common shares having a value equal to the redemption price; or a combination of cash and BioTime common shares having an aggregate value equal to the redemption price. The decision as to the form of payment to be issued in satisfaction of the redemption right will be solely within our discretion. The redemption rights will expire on the earlier of (a) the expiration time, and (b) the earliest date, if any, on which the closing price of the Series B common stock as reported on the principal national securities exchange on which the Series B common stock is listed for trading, or if not so listed than as reported on the OTC Bulletin Board, has been at least 150% of the redemption price, as adjusted, for 10 consecutive trading days. Table of Contents We have agreed with Burrill Securities LLC that until the expiration of the redemption rights we will retain ownership of 4,500,000 BioTime common shares C the ( Retention Shares ) free of any pledge, security interest, option to buy, or other contract, agreement, or obligation of ours to sell, transfer or assign those shares. The number of Retention Shares shall be adjusted pro rata in the event of any stock split, stock dividend, combination or reverse split, reclassification or recapitalization of BioTime common shares. Option to purchase additional shares We have granted the underwriter an option for a period of up to 30 days to purchase up to an additional _____ units at the offering price. Use of proceeds We intend to use the net proceeds of this offering for research and development expenditures, clinical trial expenditures, capital expenditures and working capital. See the section entitled "Use of Proceeds" below. Risk factors You should read the Risk Factors section of, and all other information set forth in, this prospectus to consider carefully before deciding whether to invest in the units offered by this prospectus. Proposed NYSE MKT symbol AST Common stock outstanding before this offering 6,537,779 shares of Series A common stock, as of November 1, 2013 23,961,040 Series B Shares, as of November 1, 2013 The Series A Shares and Series B Shares are identical in substantially all respects and will vote together as a single class, without distinction as to series, on all matters except as may otherwise be required by Delaware law. The two significant differences between the Series A Shares and Series B shares are: We may declare and pay dividends or other distributions on Series A Shares without paying a corresponding dividend or distribution on the Series B Shares. This difference in dividend and distribution rights will allow us to make a distribution to the holders of record of our Series A Shares as of a record date that we will set for determining holders of Series A Shares entitled to receive a distribution of the BioTime Warrants in the BioTime Warrants Distribution. We plan to effect the distribution of the BioTime Warrants to holders of our Series A Shares as soon as practicable after Geron notifies us of the completion of the Series A Distribution. Investors who purchase Series B Shares in this offering will not be entitled to receive BioTime Warrants on account of those shares in the BioTime Warrants Distribution. We may elect to convert the Series B Shares into Series A Shares at any time after we complete the BioTime Warrants Distribution. Each Series B Share will be convertible into one Series A Share. See "Description of Securities Conversion of Series B Shares into Series A Shares." Common stock to be outstanding after this offering 6,537,779 Series A Shares _________ Series B Shares Table of Contents Control by BioTime We are presently a subsidiary of BioTime. As of the date of this prospectus, BioTime owns 21,823,340 Series B Shares, comprising approximately 71.6% of the outstanding common stock, and owns warrants to purchase an additional 3,150,000 Series B Shares. After the completion of this offering, BioTime will own approximately ___ % of the outstanding common stock if the underwriter does not exercise its over-allotment option, or approximately __% of the outstanding common stock if the underwriter s over-allotment option is exercised in full. The number of Series A Shares that will be outstanding immediately after this offering is based on 6,537,779 shares outstanding as of November 1, 2013 and excludes the conversion of any Series B Shares into Series A Shares. The number of Series B Shares that will be outstanding immediately after this offering is based on 23,961,040 shares outstanding as of November 1, 2013 and excludes the following: 3,500,000 Series B Shares issuable upon the exercise of warrants outstanding as of November 1, 2013, at a weighted average exercise price of $5.00 per share; 2,755,000 Series B Shares issuable upon the exercise of options outstanding as of November 1, 2013, at a weighted average exercise price of $2.34 per share, and 50,000 Series B Shares issuable upon the exercise of options approved for grant by our Board of Directors at an exercise price that has not yet been determined but will be the fair market value per Series B Share as determined by the Board of Directors in accordance with our 2013 Equity Incentive Plan; 1,695,000 Series B Shares that are available for future issuance under our 2013 Equity Incentive Plan; and up to ________ Series B Shares issuable upon the exercise of the warrant(s) to be issued to the underwriter as part of this offering. Except as otherwise indicated, all information in this prospectus assumes no exercise of the underwriter of its option to purchase additional units.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001573025_corecomm_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001573025_corecomm_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read the entire prospectus carefully together with our consolidated financial statements and the related notes appearing elsewhere in this prospectus. This prospectus contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those discussed in the Risk Factors and other sections of this prospectus. Company Overview We are a leading cloud-based service provider of communications and information technology solutions to small and medium sized business ( SMB ) and enterprise customers nationwide. After several years of development, we began providing cloud-based communication services in 2005 and later introduced into our product portfolio a variety of cloud-based computing solutions. Today, we offer a full suite of cloud-based systems and services to customers nationwide, with more than 100,000 active licenses on our flagship product offering, our cloud-based business communications platform named OfficeSuite , which comprises a growing percentage of our overall revenue and the vast majority of our existing cloud-based revenue stream. We benefit from software development expertise, proprietary technology and a strong next-generation network infrastructure. This allows us to offer our customers more than just cloud-based services, but additionally products that include advanced, converged communications services and network access by leveraging our network infrastructure, on a cost-effective basis. For the three months ended March 31, 2013, over 82% of all new revenue installed during the period was provisioned on our next-generation IP network. We have provided cloud-based services in the Northeast and Mid-Atlantic United States since 2005 and offered cloud-based services nationwide since late 2009. Prior to 2009, our focus had been solely on markets across 10 states, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. These markets remain important markets for us and we have the majority of our direct sales efforts focused on these markets. We distribute our products through quota-bearing sales representatives, including a direct sales force primarily based in the Northeast and Mid-Atlantic United States, sales agents nationwide, and by our expanded efforts in wholesale, web marketing, Value Added Resellers ( VARs ) and nationwide distributor channels. As of March 31, 2013, we provided our services to approximately 30,000 business customers nationwide. For the three months ended March 31, 2013 and the year ended December 31, 2012, approximately 90% and 89%, respectively, of our total revenue was generated from retail end users in a wide array of industries, including professional services, health care, education, manufacturing, real estate, retail, automotive, non-profit groups and others. For the same periods, approximately 10% and 11%, respectively, of our total revenue was generated from wholesale, carrier access and other sources. We have transitioned a significant percentage of our revenue base to T-1- and IP-based products and cloud-based communications services. For the three months ended March 31, 2013 and the year ended December 31, 2012, revenue from these accounts represented 78% and 76%, respectively, of our retail revenue with cloud-based communications services generating 18% and 16%, respectively, of retail revenue. From the first quarter of 2009 to the first quarter of 2013, cloud-based communications products and services have grown at approximately a 27% compound annual growth rate ( CAGR ). For the three months ended March 31, 2013 and the year ended December 31, 2012, we generated total revenues of $80.8 million and $340.9 million, respectively, and Adjusted EBITDA of $11.7 million and $60.2 million, respectively. For more information, see the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations Adjusted EBITDA Presentation. Our product portfolio provides bundled packages that include cloud computing and cloud-based voice services and network connectivity with a focus on addressing the productivity, flexibility, security and business continuity needs of end users operating within complex infrastructures. In addition, our growth initiatives focus Table of Contents TABLE OF CONTENTS Page SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 1 PROSPECTUS SUMMARY 3
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001573031_broadview_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001573031_broadview_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read the entire prospectus carefully together with our consolidated financial statements and the related notes appearing elsewhere in this prospectus. This prospectus contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those discussed in the Risk Factors and other sections of this prospectus. Company Overview We are a leading cloud-based service provider of communications and information technology solutions to small and medium sized business ( SMB ) and enterprise customers nationwide. After several years of development, we began providing cloud-based communication services in 2005 and later introduced into our product portfolio a variety of cloud-based computing solutions. Today, we offer a full suite of cloud-based systems and services to customers nationwide, with more than 100,000 active licenses on our flagship product offering, our cloud-based business communications platform named OfficeSuite , which comprises a growing percentage of our overall revenue and the vast majority of our existing cloud-based revenue stream. We benefit from software development expertise, proprietary technology and a strong next-generation network infrastructure. This allows us to offer our customers more than just cloud-based services, but additionally products that include advanced, converged communications services and network access by leveraging our network infrastructure, on a cost-effective basis. For the three months ended March 31, 2013, over 82% of all new revenue installed during the period was provisioned on our next-generation IP network. We have provided cloud-based services in the Northeast and Mid-Atlantic United States since 2005 and offered cloud-based services nationwide since late 2009. Prior to 2009, our focus had been solely on markets across 10 states, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. These markets remain important markets for us and we have the majority of our direct sales efforts focused on these markets. We distribute our products through quota-bearing sales representatives, including a direct sales force primarily based in the Northeast and Mid-Atlantic United States, sales agents nationwide, and by our expanded efforts in wholesale, web marketing, Value Added Resellers ( VARs ) and nationwide distributor channels. As of March 31, 2013, we provided our services to approximately 30,000 business customers nationwide. For the three months ended March 31, 2013 and the year ended December 31, 2012, approximately 90% and 89%, respectively, of our total revenue was generated from retail end users in a wide array of industries, including professional services, health care, education, manufacturing, real estate, retail, automotive, non-profit groups and others. For the same periods, approximately 10% and 11%, respectively, of our total revenue was generated from wholesale, carrier access and other sources. We have transitioned a significant percentage of our revenue base to T-1- and IP-based products and cloud-based communications services. For the three months ended March 31, 2013 and the year ended December 31, 2012, revenue from these accounts represented 78% and 76%, respectively, of our retail revenue with cloud-based communications services generating 18% and 16%, respectively, of retail revenue. From the first quarter of 2009 to the first quarter of 2013, cloud-based communications products and services have grown at approximately a 27% compound annual growth rate ( CAGR ). For the three months ended March 31, 2013 and the year ended December 31, 2012, we generated total revenues of $80.8 million and $340.9 million, respectively, and Adjusted EBITDA of $11.7 million and $60.2 million, respectively. For more information, see the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations Adjusted EBITDA Presentation. Our product portfolio provides bundled packages that include cloud computing and cloud-based voice services and network connectivity with a focus on addressing the productivity, flexibility, security and business continuity needs of end users operating within complex infrastructures. In addition, our growth initiatives focus Table of Contents TABLE OF CONTENTS Page SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 1 PROSPECTUS SUMMARY 3
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001573053_open_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001573053_open_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read the entire prospectus carefully together with our consolidated financial statements and the related notes appearing elsewhere in this prospectus. This prospectus contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those discussed in the Risk Factors and other sections of this prospectus. Company Overview We are a leading cloud-based service provider of communications and information technology solutions to small and medium sized business ( SMB ) and enterprise customers nationwide. After several years of development, we began providing cloud-based communication services in 2005 and later introduced into our product portfolio a variety of cloud-based computing solutions. Today, we offer a full suite of cloud-based systems and services to customers nationwide, with more than 100,000 active licenses on our flagship product offering, our cloud-based business communications platform named OfficeSuite , which comprises a growing percentage of our overall revenue and the vast majority of our existing cloud-based revenue stream. We benefit from software development expertise, proprietary technology and a strong next-generation network infrastructure. This allows us to offer our customers more than just cloud-based services, but additionally products that include advanced, converged communications services and network access by leveraging our network infrastructure, on a cost-effective basis. For the three months ended March 31, 2013, over 82% of all new revenue installed during the period was provisioned on our next-generation IP network. We have provided cloud-based services in the Northeast and Mid-Atlantic United States since 2005 and offered cloud-based services nationwide since late 2009. Prior to 2009, our focus had been solely on markets across 10 states, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. These markets remain important markets for us and we have the majority of our direct sales efforts focused on these markets. We distribute our products through quota-bearing sales representatives, including a direct sales force primarily based in the Northeast and Mid-Atlantic United States, sales agents nationwide, and by our expanded efforts in wholesale, web marketing, Value Added Resellers ( VARs ) and nationwide distributor channels. As of March 31, 2013, we provided our services to approximately 30,000 business customers nationwide. For the three months ended March 31, 2013 and the year ended December 31, 2012, approximately 90% and 89%, respectively, of our total revenue was generated from retail end users in a wide array of industries, including professional services, health care, education, manufacturing, real estate, retail, automotive, non-profit groups and others. For the same periods, approximately 10% and 11%, respectively, of our total revenue was generated from wholesale, carrier access and other sources. We have transitioned a significant percentage of our revenue base to T-1- and IP-based products and cloud-based communications services. For the three months ended March 31, 2013 and the year ended December 31, 2012, revenue from these accounts represented 78% and 76%, respectively, of our retail revenue with cloud-based communications services generating 18% and 16%, respectively, of retail revenue. From the first quarter of 2009 to the first quarter of 2013, cloud-based communications products and services have grown at approximately a 27% compound annual growth rate ( CAGR ). For the three months ended March 31, 2013 and the year ended December 31, 2012, we generated total revenues of $80.8 million and $340.9 million, respectively, and Adjusted EBITDA of $11.7 million and $60.2 million, respectively. For more information, see the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations Adjusted EBITDA Presentation. Our product portfolio provides bundled packages that include cloud computing and cloud-based voice services and network connectivity with a focus on addressing the productivity, flexibility, security and business continuity needs of end users operating within complex infrastructures. In addition, our growth initiatives focus Table of Contents TABLE OF CONTENTS Page SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 1 PROSPECTUS SUMMARY 3
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001573064_atx_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001573064_atx_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..efc3a56bdef422ea7f2ebe4caa72341889d8888e
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read the entire prospectus carefully together with our consolidated financial statements and the related notes appearing elsewhere in this prospectus. This prospectus contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those discussed in the Risk Factors and other sections of this prospectus. Company Overview We are a leading cloud-based service provider of communications and information technology solutions to small and medium sized business ( SMB ) and enterprise customers nationwide. After several years of development, we began providing cloud-based communication services in 2005 and later introduced into our product portfolio a variety of cloud-based computing solutions. Today, we offer a full suite of cloud-based systems and services to customers nationwide, with more than 100,000 active licenses on our flagship product offering, our cloud-based business communications platform named OfficeSuite , which comprises a growing percentage of our overall revenue and the vast majority of our existing cloud-based revenue stream. We benefit from software development expertise, proprietary technology and a strong next-generation network infrastructure. This allows us to offer our customers more than just cloud-based services, but additionally products that include advanced, converged communications services and network access by leveraging our network infrastructure, on a cost-effective basis. For the three months ended March 31, 2013, over 82% of all new revenue installed during the period was provisioned on our next-generation IP network. We have provided cloud-based services in the Northeast and Mid-Atlantic United States since 2005 and offered cloud-based services nationwide since late 2009. Prior to 2009, our focus had been solely on markets across 10 states, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. These markets remain important markets for us and we have the majority of our direct sales efforts focused on these markets. We distribute our products through quota-bearing sales representatives, including a direct sales force primarily based in the Northeast and Mid-Atlantic United States, sales agents nationwide, and by our expanded efforts in wholesale, web marketing, Value Added Resellers ( VARs ) and nationwide distributor channels. As of March 31, 2013, we provided our services to approximately 30,000 business customers nationwide. For the three months ended March 31, 2013 and the year ended December 31, 2012, approximately 90% and 89%, respectively, of our total revenue was generated from retail end users in a wide array of industries, including professional services, health care, education, manufacturing, real estate, retail, automotive, non-profit groups and others. For the same periods, approximately 10% and 11%, respectively, of our total revenue was generated from wholesale, carrier access and other sources. We have transitioned a significant percentage of our revenue base to T-1- and IP-based products and cloud-based communications services. For the three months ended March 31, 2013 and the year ended December 31, 2012, revenue from these accounts represented 78% and 76%, respectively, of our retail revenue with cloud-based communications services generating 18% and 16%, respectively, of retail revenue. From the first quarter of 2009 to the first quarter of 2013, cloud-based communications products and services have grown at approximately a 27% compound annual growth rate ( CAGR ). For the three months ended March 31, 2013 and the year ended December 31, 2012, we generated total revenues of $80.8 million and $340.9 million, respectively, and Adjusted EBITDA of $11.7 million and $60.2 million, respectively. For more information, see the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations Adjusted EBITDA Presentation. Our product portfolio provides bundled packages that include cloud computing and cloud-based voice services and network connectivity with a focus on addressing the productivity, flexibility, security and business continuity needs of end users operating within complex infrastructures. In addition, our growth initiatives focus Table of Contents TABLE OF CONTENTS Page SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 1 PROSPECTUS SUMMARY 3
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001573590_first_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001573590_first_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..6d68eccb9d3ea985ba019ab8a651d6e5db46303f
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@@ -0,0 +1 @@
+The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS FIRST XERIS CORP. $39,000 3,000,000 SHARES OF COMMON STOCK $0.013 PER SHARE This registration statement constitutes the initial public offering of FIRST XERIS CORP. (the "Company", "us", "FXC" or "FIRST XERIS") common stock. FIRST XERIS is registering 3,000,000 shares of common stock at an offering price of $0.013 per share for a total amount of $39,000. There are no underwriting or broker dealers involved with the offering. The company will offer the securities on a BEST EFFORTS basis, which means that our director and officer will use his best efforts to market and sell the common stock. The shares will be offered at a fixed price of $0.013 per share for the duration of the offering, and there will be no minimum number of shares required to be sold close the offering. The Company s sole officer and director, Mr. David Mullins, will be responsible to market and sell these securities. SHARES OFFERED PRICE TO SELLING AGENT PROCEEDS TO BY COMPANY PUBLIC COMMISSIONS THE COMPANY Per Share $ 0.013 Not applicable $ 0.013 Minimum Purchase None Not applicable Not applicable Total (3,000,000 shares) $ 39,000 Not applicable $ 39,000 Currently, Mr. David Mullins owns 100% of the Company s common stock. After the offering, Mr. Mullins will retain a sufficient number of shares to continue to control the operations of the Company. If all the shares are not sold, there is the possibility that the amount raised may be minimal and might not even cover the costs of the offering which the Company estimates at $9,000. The proceeds from the sale of the securities will be placed directly into the Company s account; any investor who purchases shares will have no assurance that any monies besides themselves will be subscribed to the prospectus. All proceeds from the sale of the securities are non-refundable, except as may be required by applicable laws. The Company will pay all expenses incurred in this offering. There has been no public trading market for the common stock of FIRST XERIS. The Company intends to apply for quotation of its common stock on the OTC Bulletin Board, the Company will require the assistance of a market-maker to apply for quotation and there is no guarantee a market-maker will assist the Company. We are considered a shell company as defined under Rule 405 of the Securities Act, because we are a company with nominal operations and with assets consisting solely of cash and cash equivalents. Accordingly, there will be illiquidity of any future trading market until we are no longer considered a shell company, and there will be restrictions imposed upon the transferability of unregistered shares as outlined in Rule 144(i) of the Securities Ac. Refer to the section entitled "Risk Factors" on page 5. The Company qualifies as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act which became law in April, 2012 and will be subject to reduced public company reporting requirements. See "Jumpstart Our Business Startups Act" contained herein. The offering shall terminate on the earlier of (i) the date when the sale of all 3,000,000 shares is completed or (ii) ninety (90) days from the date of this prospectus becomes effective. The Company may, at its discretion, extend the offering for an additional 90 days beyond the ninety (90) days from the effective date of this prospectus. These securities are speculative and involve a high degree of risk. You should purchase shares only if you can afford the complete loss of your investment. Please refer to "RISK FACTORS" beginning on page 5. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the act and is therefore unenforceable. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the prospectus. Any representation to the contrary is a criminal offense. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this Prospectus. The date of this prospectus is ____________, 2013 - 1 - UNDERTAKINGS The registrant hereby undertakes: 1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; 2. That for the purpose of determining liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; 3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; and 4. That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. 5. That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the registrant undertakes that in a primary offering of securities of the registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) Any preliminary prospectus or prospectus of the registrant relating to the offering required to be filed pursuant to Rule 424; (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the registrant or used or referred to by the registrant; (iii) The portion of any other free writing prospectus relating to the offering containing material information about the registrant or its securities provided by or on behalf of the registrant; and PROSPECTUS SUMMARY This summary only highlights selected information contained in greater detail elsewhere in this Prospectus. This summary may not contain all of the information that you should consider before investing in our common stock. You should carefully read the entire Prospectus, including "Risk Factors" beginning on Page 5, and the consolidated financial statements, before making an investment decision. All dollar amounts refer to US dollars unless otherwise indicated.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001574109_gemshares_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001574109_gemshares_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001574109_gemshares_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001574761_np_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001574761_np_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001574761_np_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001574769_np-fiesta_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001574769_np-fiesta_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001574769_np-fiesta_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001574795_station_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001574795_station_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001574795_station_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001574800_np-ip_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001574800_np-ip_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001574800_np-ip_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001574809_sc-sp-2_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001574809_sc-sp-2_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001574809_sc-sp-2_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001574811_sc-sp-4_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001574811_sc-sp-4_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001574811_sc-sp-4_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001574813_sc-sp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001574813_sc-sp_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001574813_sc-sp_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001574828_np-sunset_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001574828_np-sunset_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001574828_np-sunset_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001574836_sc-madera_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001574836_sc-madera_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001574836_sc-madera_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001574838_sc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001574838_sc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001574838_sc_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001574841_sc-sonoma_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001574841_sc-sonoma_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001574841_sc-sonoma_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001575878_city_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001575878_city_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..fb17f7e557a79f7ba5433125202f83fdcbea7581
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001575878_city_prospectus_summary.txt
@@ -0,0 +1 @@
+use market data and industry forecasts and projections throughout this prospectus, and in particular in the sections entitled "Summary," "Market Opportunity" and "Our Business." We have obtained substantially all of this information from a market study prepared for us in connection with this offering by John Burns Real Estate Consulting, LLC ("JBREC"), an independent research provider and consulting firm. We have paid JBREC a fee of $40,000 for that market study, plus an amount charged at an hourly rate for additional information we may require from JBREC from time to time in connection with that market study. Such information is included in this prospectus in reliance on JBREC's authority as an expert on such matters. Any forecasts prepared by JBREC are based on data (including third party data), models and experience of various professionals, and are based on various assumptions (including the completeness and accuracy of third party data), all of which are subject to change without notice. See "Experts." In addition, certain market and industry data has been taken from publicly available industry publications. These sources generally state that the information they provide has been obtained from sources believed to be reliable. We have not independently verified the data obtained from these sources. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and additional uncertainties regarding the other forward-looking statements in this prospectus. Table of Contents SUMMARY This summary highlights information contained elsewhere in this prospectus, but it does not contain all of the information that you may consider important in making your investment decision. Therefore, you should read this entire prospectus carefully, including, in particular, the section under the heading
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001576044_andeavor_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001576044_andeavor_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..85aedf976f8cf1b408a7f4d3ff246a07a9aaf74b
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001576044_andeavor_prospectus_summary.txt
@@ -0,0 +1 @@
+S-1/A 1 d526933ds1a.htm FORM S-1/A Form S-1/A Table of Contents AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 1, 2013 Registration No. 333-188487 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 4 to Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 QEP Midstream Partners, LP (Exact name of Registrant as Specified in Its Charter) Delaware 4922 80-0918184 (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 1050 17th Street, Suite 500 Denver, Colorado 80265 (303) 672-6900 (Address, Including Zip Code, and Telephone Number, including Area Code, of Registrant s Principal Executive Offices) Richard J. Doleshek Executive Vice President and Chief Financial Officer 1050 17th Street, Suite 500 Denver, Colorado 80265 (303) 672-6900 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copies to: Michael E. Dillard Sean T. Wheeler Latham & Watkins LLP 811 Main Street, Suite 3700 Houston, Texas 77002 (713) 546-5400 Jeffery K. Malonson Douglas E. McWilliams Vinson & Elkins L.L.P. 1001 Fannin Street, Suite 2500 Houston, Texas 77002 (713) 758-2222 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS SUBJECT TO COMPLETION, DATED AUGUST 1, 2013 20,000,000 Common Units Representing Limited Partner Interests This is an initial public offering of common units representing limited partner interests of QEP Midstream Partners, LP. We were recently formed by QEP Resources, Inc., or QEP. We are offering 20,000,000 common units in this offering. We expect that the initial public offering price will be between $19.00 and $21.00 per common unit. Prior to this offering, there has been no public market for our common units. We have applied to list our common units on the New York Stock Exchange under the symbol QEPM. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012. As a result of certain laws and regulations to which we are or may in the future become subject, we may require owners of our common units to certify that they are both U.S. citizens and subject to U.S. federal income taxation on our income. If you are not both a citizenship eligible holder and a rate eligible holder, your common units may be subject to redemption. Investing in our common units involves risks. Please read Risk Factors beginning on page 23. These risks include the following: We may not have sufficient cash from operations following the establishment of cash reserves and payment of fees and expenses, including cost reimbursements to our general partner, to enable us to pay the minimum quarterly distribution, or any distribution, to holders of our common and subordinated units. Because of the natural decline in production from existing wells in our areas of operation, our success depends, in part, on producers replacing declining production and also on our ability to secure new sources of natural gas and crude oil. Any decrease in the volumes of natural gas or crude oil that we gather could adversely affect our business and operating results. Natural gas and crude oil prices are volatile, and a change in these prices in absolute terms, or an adverse change in the prices of natural gas and crude oil relative to one another, could adversely affect our cash flow and our ability to make cash distributions to our unitholders. Our general partner and its affiliates, including QEP, have conflicts of interest with us and limited duties to us and our unitholders, and they may favor their own interests to our detriment and that of our unitholders. Additionally, we have no control over QEP s business decisions and operations, and QEP is under no obligation to adopt a business strategy that favors us. Unitholders have very limited voting rights and, even if they are dissatisfied, they cannot remove our general partner without its consent. There is no existing market for our common units, and a trading market that will provide unitholders with adequate liquidity may not develop. The price of our common units may fluctuate significantly, and unitholders could lose all or part of their investment. Our tax treatment depends on our status as a partnership for federal income tax purposes. If the Internal Revenue Service were to treat us as a corporation for federal income tax purposes, which would subject us to entity-level taxation, then our cash available for distribution to our unitholders would be substantially reduced. Our unitholders share of our income will be taxable to them for federal income tax purposes even if they do not receive any cash distributions from us. Per Common Unit Total Initial price to public $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to QEP Midstream Partners, LP $ $ (1) Excludes a structuring fee equal to 0.50% of the gross proceeds of this offering payable to Wells Fargo Securities, LLC. We will also pay up to $20,000 of reasonable fees and expenses of counsel related to the review by the Financial Industry Regulatory Authority, Inc. of the terms of sale of the common units offered hereby. Please read Underwriting. The structuring fee will be paid to Wells Fargo Securities, LLC from the net proceeds of this offering. Please read Use of Proceeds. We have granted the underwriters a 30-day option to purchase up to an additional 3,000,000 common units from us at the initial public offering price, less the underwriting discount, commission and structuring fee if the underwriters sell more than common units in this offering. None of the Securities and Exchange Commission, any state securities commission or any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the common units on or about , 2013. Wells Fargo Securities Citigroup Deutsche Bank Securities Morgan Stanley J.P. Morgan Goldman, Sachs & Co. BMO Capital Markets SunTrust Robinson Humphrey BB&T Capital Markets Piper Jaffray CIBC TD Securities Mitsubishi UFJ Securities Janney Montgomery Scott Prospectus dated , 2013. Table of Contents Liquidity and Capital Resources 100 Off-Balance Sheet Arrangements 105 Credit Risk 105 Contractual Cash Obligations and Other Commitments 106 Critical Accounting Policies and Estimates 106 Quantitative and Qualitative Disclosures About Market Risk 108
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001576336_ajs_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001576336_ajs_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..b3b9fa8c55f33cd50eb739434770172407f23a6d
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001576336_ajs_prospectus_summary.txt
@@ -0,0 +1 @@
+S-1/A 1 a13-14437_1s1a.htm S-1/A Table of Contents As filed with the Securities and Exchange Commission on August 5, 2013 Registration No. 333-189171 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. 2 TO THE FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AJS Bancorp, Inc. (Exact Name of Registrant as Specified in Its Charter) Maryland 6712 To be Applied For (State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Incorporation or Organization) Classification Code Number) Identification Number) 14757 South Cicero Avenue Midlothian, Illinois 60445 (708) 687-7400 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant s Principal Executive Offices) Mr. Thomas R. Butkus Chairman, President and Chief Executive Officer 14757 South Cicero Avenue Midlothian, Illinois 60445 (708) 687-7400 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copies to: Benjamin M. Azoff, Esq. Alan Schick, Esq. Luse Gorman Pomerenk & Schick, P.C. 5335 Wisconsin Avenue, N.W., Suite 780 Washington, D.C. 20015 (202) 274-2000 Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: x If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered Proposed maximum offering price per share Proposed maximum aggregate offering price Amount of registration fee Common Stock, $0.01 par value per share 2,314,375 shares $ 10.00 $ 23,143,750 (1) $ 3,157* * Previously paid. (1) Estimated solely for the purpose of calculating the registration fee. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents TABLE OF CONTENTS Page SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001577416_emerald_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001577416_emerald_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..459a53ac7c114f784f10e3cd3934394e40e250a6
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001577416_emerald_prospectus_summary.txt
@@ -0,0 +1 @@
+The information in this prospectus is not complete and may be amended. The Registrant may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED DECEMBER 16, 2013 EMERALD ISLE EXPLORATION LTD. 1,000,000 SHARES OF COMMON STOCK This Prospectus relates to the offer and sale of a maximum of 1,000,000 shares (the Maximum Offering ) of common stock, $0.001 par value, by Emerald Isle Explorations Ltd., a Nevada company ( we , us , our , Emerald Isle Explorations , Company or similar terms). There is no minimum for this Offering. The Offering will commence promptly on, and terminate 16 months from, the date upon which this prospectus is declared effective by the SEC. We will pay all expenses incurred in this Offering. We are an emerging growth company under applicable Securities and Exchange Commission rules and will be subject to reduced public company reporting requirements. The offering of the 1,000,000 shares is a best efforts offering, which means that our sole director and officer will use his best efforts to sell the common stock and there is no commitment by any person to purchase any shares. The shares will be offered at a fixed price of $0.035 per share for the duration of the offering. There is no minimum number of shares required to be sold to close the offering. Proceeds from the sale of the shares will be used to fund the initial stages of our business development. We have not made any arrangements to place funds received from share subscriptions in an escrow, trust or similar account. Any funds raised from the offering will be immediately available to us for our immediate use. This is a direct participation offering, since we are offering the stock directly to the public without the participation of an underwriter. Our sole officer and director will be solely responsible for selling shares under this Offering and no commission will be paid on any sales. Prior to this Offering, there has been no public market for our common stock and we have not applied for the listing or quotation of our common stock on any public market. We have arbitrarily determined the offering price of $0.035 per share in relation to this Offering. The offering price bears no relationship to our assets, book value, earnings or any other customary investment criteria. After the effective date of the registration statement, we intend to seek a market maker to file an application with the Financial Industry Regulatory Authority ( FINRA ) to have our common stock quoted on the OTC Bulletin Board. We currently have no market maker who is willing to list quotations for our stock. There is no assurance that an active trading market for our shares will develop or will be sustained if developed. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this Prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common shares. BEFORE INVESTING, YOU SHOULD CAREFULLY READ THIS PROSPECTUS, PARTICULARLY, THE RISK FACTORS SECTION BEGINNING ON PAGE 5. Neither the United States Securities and Exchange Commission ( SEC ), nor any state securities commission, has approved or disapproved of these securities or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense. The following table of contents has been designed to help you find information contained in this prospectus. We encourage you to read the entire prospectus. TABLE OF CONTENTS Page Prospectus Summary 3
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001577882_vortex_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001577882_vortex_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..c7b55b7dda41e06c58491e6c6db54b6dce4ea09e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001577882_vortex_prospectus_summary.txt
@@ -0,0 +1 @@
+PRELIMINARY PROSPECTUS UA GRANITE CORPORATION 2,500,000 SHARES OF COMMON STOCK This prospectus relates to the offer and sale of a maximum of 2,500,000 shares (the Maximum Offering ) of common stock, $0.00001 par value, by UA Granite Corporation Inc., a Nevada company ( we , us , our , UA Granite , Company or similar terms). There is no minimum for this offering. The offering will commence promptly on the date upon which this prospectus is declared effective by the Securities and Exchange Commission ( SEC ) and will continue for 16 months. We will pay all expenses incurred in this offering. We are an emerging growth company under applicable SEC rules and will be subject to reduced public company reporting requirements. The offering of the 2,500,000 shares is a best efforts offering, which means that our sole officer and director will use his best efforts to sell the shares and there is no commitment by any person to purchase any shares. The shares will be offered at a fixed price of $0.04 per share for the duration of the offering. There is no minimum number of shares required to be sold to close the offering. Proceeds from the sale of the shares will be used to fund the initial stages of our business development. We have not made any arrangements to place funds received from share subscriptions in an escrow, trust or similar account. Any funds raised from the offering will be immediately available to us for our immediate use. Offering Price Per Share Commissions Proceeds to Company Before Expenses if 25% of the shares are sold Proceeds to Company Before Expenses if 50% of the shares are sold Proceeds to Company Before Expenses if 75% of the shares are sold Proceeds to Company Before Expenses if 100% of the shares are sold Common Stock $0.04 Not Applicable $25,000 $50,000 $75,000 $100,000 Totals $0.04 Not Applicable $25,0000 $50,000 $75,000 $100,000 This is a direct participation offering since we are offering the stock directly to the public without the participation of an underwriter. Our officer and sole director will be solely responsible for selling shares under this offering and no commission will be paid on any sales. Prior to this offering, there has been no public market for our common stock and we have not applied for the listing or quotation of our common stock on any public market. We have arbitrarily determined the offering price of $0.04 per share in relation to this offering. The offering price bears no relationship to our assets, book value, earnings or any other customary investment criteria. After the effective date of the registration statement, we intend to seek a market maker to file an application with the Financial Industry Regulatory Authority ( FINRA ) to have our common stock quoted on the OTC Bulletin Board. We currently have no market maker who is willing to list quotations for our shares of stock. There is no assurance that an active trading market for our shares will develop or will be sustained if developed. We are a shell company within the meaning of Rule 405, promulgated pursuant to Securities Act, because we have nominal assets and nominal operations. Because we are a shell company, the Rule 144 safe harbor is not available for the resale of any restricted securities issued by us in any subsequent unregistered offering. This will likely make it more difficult for us to attract additional capital through subsequent unregistered offerings because purchasers of securities in such unregistered offerings will not be able to resell their securities in reliance on Rule 144, a safe harbor on which holders of restricted securities usually rely to resell securities. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business is subject to many risks and an investment in our shares of common stock will also involve a high degree of risk. You should carefully consider the factors described under the heading risk factors beginning on page 5 before investing in our shares of common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. The date of this prospectus is _______________, 2013. The following table of contents has been designed to help you find information contained in this prospectus. We encourage you to read the entire prospectus. TABLE OF CONTENTS Page Prospectus Summary 3
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001579541_oriental_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001579541_oriental_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..c35edd475375e25ed61c8a44f96092f58bb5a39e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001579541_oriental_prospectus_summary.txt
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+PROSPECTUS SUMMARY AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND DINAMO CORP. REFERS TO DINAMO CORP. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK. DINAMO CORP. We are a development stage company and our business is distribution of redemption machines . Dinamo Corp. was incorporated in Nevada on March 25, 2013. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $40,000 for the next twelve months as described in our Plan of Operations.Being a development stage company, we have very limited operating history. The amount of funds necessary to implement our plan of operation cannot be predicted with any certainty and may exceed any estimates we set forth in this prospectus. We believe prospective investors should bear the risk that we will be unable to raise sufficient funds to implement our plan in the absence of a minimum offering amount or escrow account because we believe that we have no other means of financing that will garner as much financing for the Company as this offering. Our principal executive offices are located at 35 Frensham Walk, Farnham Common, Slough, UK. Our phone number is + 44 161 2983401. From inception until the date of this filing, we have had very limited operating activities. Our financial statements from inception (March 25, 2013) through July 31, 2013, reports no revenues and a net loss of $6,998. Our independent registered public accounting firm has issued an audit opinion for Dinamo Corp. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. We have developed our business plan, and executed a Contract with PW Cosmet Kosi ski Zbigniew, where we engage d COSMET as an independent contractor for the specific purpose of developing, manufacturing and supplying products for us. We have no commitments with COSMET as of the date of this filing. Our operations to date have been merely preparatory and have not generated any revenues. We are an emerging growth company within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. For a description of the qualifications and other requirements applicable to emerging growth companies and certain elections that we have made due to our status as an emerging growth company, see RISK FACTORS RISKS RELATED TO THIS OFFERING AND OUR COMMON STOCK - WE ARE AN `EMERGING GROWTH COMPANY AND WE CANNOT BE CERTAIN IF THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS on page 9 of this prospectus. Because we are a shell company, the Rule 144 safe harbor is not available for the resale of any restricted securities issued by us in any subsequent unregistered offering. This will likely make it more difficult for us to attract additional capital through subsequent unregistered offerings because purchasers of securities in such unregistered offerings will not be able to resell their securities in reliance on Rule 144, a safe harbor on which holders of restricted securities usually rely to resell securities. We are offering our shares and seeking to become a reporting issuer under the Securities Exchange Act of 1934, as amended, because we believe that this will provide us with greater access to capital, that we will become better known, and be able to obtain financing more easily in the future if investor interest in our business grows enough to sustain a secondary trading market in our securities. Additionally, we believe that being a reporting issuer increases our credibility and that we may be able to attract and retain more highly qualified personnel once we are not a shell company by potentially offering stock options, bonuses, or other incentives with a known market value. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. THE OFFERING The Issuer: DINAMO CORP. Securities Being Offered: 4,000,000 shares of common stock. Price Per Share: $0.02 Duration of the Offering: The shares will be offered for a period of two hundred and forty (240) days from the effective date of this prospectus. Our offering will terminate as of the earlier of that date, when all the shares have been sold or when our sole director, Ms. Gajdzis decides to terminate the offering. The Company will deliver stock certificates attributable to shares of common stock purchased directly to the purchasers within ninety (90) days of the close of the offering. Gross Proceeds $80,000 Securities Issued and Outstanding: There are 4,500,000 shares of common stock issued and outstanding as of the date of this prospectus, held by sole officer and director, Jolanta Gajdzis Subscriptions All subscriptions once accepted by us are irrevocable. Registration Costs We estimate our total offering registration costs to be approximately $9,000.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001582249_actavia_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001582249_actavia_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..13007bca0f5432077c847fa183c2fd5a0156156f
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001582249_actavia_prospectus_summary.txt
@@ -0,0 +1 @@
+Table of Contents SUMMARY To understand this offering fully, you should read the entire prospectus carefully, including the risk factors beginning on page 8 and the financial statements. Active With Me Inc. We were incorporated on December 6, 2012 under the laws of the state of Nevada. Our principal offices are located at 2005 Lakeshore Road, Sarnia, Ontario, Canada N7X 1G4. Our telephone number is (519) 337-9048. Active With Me Inc. is a development stage company which intends to create online resources that seamlessly offer travelers unique, highly relevant and user-friendly information on activity-based travel. It will be designed to fill a void in the marketplace by offering third-party content and information to visitors in their activity of choice, while also having the ability to offer links to related clubs and organizations that provide additional information, as well as the potential for interactive experiences. The registrant s website www.activewithme.com will be designed to offer a fundamentally different experience than any other offering in today s market. The registrant s plan is to design its website centered purely on activities and offer an ability to quickly access relevant content to the particular activity of choice. We are still in our development stage and cannot commence business operations on our website until its completion. The Active With Me website has not yet been developed, and substantial additional development work and funding will be required before the website can be fully operational. Early stage development of the website will include design and construction of the initial beta website, populating the site with activity-based content, development of site graphics and test marketing the site. Expenses related to this phase are expected to be less than $30,000. The president will spearhead this effort. The registrant currently has sufficient capital to complete this stage of its plan of operations. The registrant expects to have this stage of the plan of operations completed by the end of March 2014. Further development of the website with the goal of launching the live website will be focused on major US points of interest. The registrant expects the further development to require the hiring of an initial 2 permanent employees. Expenses related to this phase are expected to be related to the costs of hiring two employees, approximately $7,000 per month. The company currently does not have sufficient capital to initiate this phase of its plan of operations. If the registrant s website gains traction in the marketplace and is able to attract advertisers we will continue to build out the website to more and more points of interest all around the world. The Company will also begin to build on its marketing efforts as described in the Marketing section. The registrant does not currently have sufficient capital for this phase of its plan of operations. We can provide no assurance that we will be successful in our planned development of our website. We currently do not have any arrangements for financing and we may not be able to obtain financing when required. We believe the only source of funds that would be realistic is through the sale of equity capital. Table of Contents We have not earned any revenues to date. We do not anticipate earning revenues until we have completed our website and commenced marketing activities. As of September 30, 2013, we had $37,955 cash on hand. Our working capital position as of September 30, 2013 was $37,350. Since our inception through September 30, 2013, we have incurred a net loss of $12,823. Our net loss is due to lack of revenues to offset our expenses and the professional fees related to the creation and operation of our business. Our auditor has expressed substantial doubt about our ability to continue as a going concern given our lack of operating history and due to the fact that to date we have had no revenues. Our fiscal year ended is June 30. Although we were only recently incorporated and have not yet commenced substantive operations, we believe that conducting this Offering will allow the Company added flexibility to raise capital in today's financial climate. We believe that investors in today's markets demand full transparency and by our registering this Offering and becoming a reporting company, we will be able to capitalize on this fact. While there is currently no public market for the Company's common stock, management believes that the Company will meet all requirements to be quoted on the OTC market, and even though the Company s common stock will likely be a penny stock, becoming a reporting company will provide us with enhanced visibility and give us a greater possibility to provide liquidity to our shareholders. The Company is considered a Shell Company as defined by as defined in Rule 405. As such no shares will be eligible to be sold or transferred under Rule 144 until in excess of 1 year from the filing of the equivalent of Form 10 information by the Company with the SEC. The selling shareholders in this offering are underwriters. The Offering Securities Being Offered Up to 1,805,000 common shares. Sales by Selling Shareholders The sales price to the public is fixed at $0.04 per share for the duration of the offering. We are registering common shares on behalf of the selling shareholders in this prospectus. We will not receive any cash or other proceeds in connection with the subsequent sales. We are not selling any common shares on behalf of selling shareholders and have no control or affect on the selling shareholders. Securities Issued and to be Issued 3,305,000 shares of our common stock are issued and outstanding as of the date of this prospectus. All of the common stock to be sold under this prospectus will be sold by existing shareholders and thus there will be no increase in our issued and outstanding shares as a result of this offering. The issuance to the selling shareholders was exempt due to the provisions of Regulation S. Table of Contents Market for our common stock. Our common stock is presently not traded on any market or securities exchange and we have not applied for listing or quotation on any public market. We intend to have a market maker file an application for our common stock to be quoted on the OTC Bulletin Board and/or the OTCQB. However, we do not have a market maker that has agreed to file such application. If our securities are not quoted on the OTC Bulletin Board or the OTCQB, a security holder may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our securities. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Summary Financial Information September 30, 2013 Balance Sheet Data (unaudited) Cash $ 37,955 Total Current Assets $ 37,955 Liabilities $ 605 Total Stockholder s Equity $ 38,882 Statement of Operations From Inception (December 6, 2012) to September 30, 2013 Revenue $ - Net Loss for the Period $ 12,823 Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001582292_unlimited_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001582292_unlimited_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..9cabc62391db5924b8da42f41a381ab6ebf4f6af
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001582292_unlimited_prospectus_summary.txt
@@ -0,0 +1 @@
+EXECUTIVE COMPENSATION 33 Summary Compensation Table 33 Director Compensation 34 Employment Agreements 34 2013 Company Stock Option Plan 35 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 35 DESCRIPTION OF CAPITAL STOCK 35
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001582589_clone_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001582589_clone_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001582589_clone_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001583122_list_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001583122_list_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6071657f9bfc1859657b5c8f7a9706f81a867d29
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001583122_list_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY As used in this prospectus, references to the Company, we, our , us or List Solutions refer to List Solutions, Inc. unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements, and the notes to the financial statements. Our Company List Solutions, Inc. was incorporated on May 9, 2013 under the laws of the State of Delaware for the purpose of selling and/or renting proprietary lists of individuals, emails, telephone numbers, and addresses to help companies and organizations generate business via marketing campaigns using email, direct mail, and telephone calls. As of the date of this prospectus, we have cash reserves of $0. Although the Company is currently provided free access to office space and telephone and internet service by The Owings Group, LLC, it is anticipated that we will begin to pay for these expenses if we realize 75% participation or higher in this Offering (See "Use of Proceeds" on page 16). As the Company begins to expand and increase its client base, we expect additional administrative and operational costs. We anticipate that some of these costs will be covered revenues from Company operations and the balance will be covered by using proceeds from this Offering. If we are unsuccessful in raising sufficient funds from this Offering, we may need to seek alternative means of funding. We are a development stage company that has not realized any revenues to date. We are in the early stages of developing our business which is to utilize and grow our database of individuals names, emails, telephone numbers, and addresses to create lists that aid in the marketing endeavors of our clients. Currently, we have a database of 5.6 million individuals with varying amounts of personal information (i.e. emails, addresses, phone numbers, etc.). These individuals represent a niche market of investors who actively invest in small cap and microcap stocks. We intend to incorporate this unique aspect of our database when marketing our lists to clients and prospective clients. Our proprietary database of 5.6 million individuals was acquired from MJSC Enterprises, LLC in return for common shares of the Company s stock. The Owings Group, LLC paid a third party internet marketing company $27,369 to review and update our list to ensure the accuracy of our information by using publicly available information on the internet. From our database, List Solutions, Inc. extracts, manipulates and sorts information to create various list products to best address our clients needs. The company will rent out lists derived from its database for use primarily in email marketing. We also plan to market the lists for use in direct mail marketing and telemarketing campaigns as well. Our plan of operations over the 12 month period following the successful completion of this offering of 2,000,000 shares of common stock is to use (i) approximately $20,000 to $30,000 to set up our office, (ii) approximately $45,000 to $50,000 to continue developing and refining our website, (iii) approximately $40,000 to $70,000 to implement our marketing strategy, (iv) approximately $70,000 to $100,000 to pay our President a salary and hire additional employees, (v) approximately $20,000 to $50,000 for acquiring new lists and growing our database, (vi) approximately $25,000 to $50,000 to update and enhance the existing information in our database, (vii) approximately $15,000 to cover the costs of being a reporting issuer and (viii) $200,000 to pay off a liability to Owings-1, LLC (See Plan of Operations" on page 38). Our estimated annual cost of $15,000 for being a reporting issuer under the Securities Exchange Act of 1934 does not include the cost of this offering. We need to raise at least $200,000 from this Offering to satisfy an obligation to Owings-1, LLC for services rendered in relation to this S-1 registration (See Client Services Agreement" at Exhibit 10.1). The $200,000 is due to Owings-1, LLC once this prospectus is declared effective. In the event that we fail to raise sufficient proceeds through this Offering to satisfy this obligation, Owings-1, LLC has verbally agreed to renegotiate or extend the repayment terms of this liability. We need to realize maximum participation in this Offering to implement our complete Plan of Operation. If we are unsuccessful in this offering, we will need a minimum financing of $15,000 over the next 12 months to cover the costs of our quarterly and annual filing requirements. If necessary, The Owings Group, LLC, has verbally agreed to provide us with an on demand, non-interest bearing loan to cover these costs. In this event, The Owings Group, LLC has also verbally agreed to continue providing us with office space and access to internet and telephone services free of charge. However, there is no guarantee that Owings-1, LLC will make accommodations in relation to our $200,000 obligation or that The Owings Group, LLC will extend a loan to us or provide free access to office space and internet and telephone service in the event our Offering fails. If we do not realize sufficient participation in our Offering, and are unable to negotiate alternative means of financing, we could be forced to cease operations. The Company's strategy is to develop and market comprehensive list products utilizing its database. Our focus in the short-term is to: Maintain and grow a comprehensive database of individuals; Continuously update our database to ensure all information is accurate; Develop and refine our process of sorting our database to develop lists for various purposes; Approach prospective clients to purchase our lists; and Establish a high level of customer service. Initially, the Company will market our list services to those companies and organizations that work closely with small cap and microcap stocks. The following entities comprise our target market for the lists from our database: Broker/Dealers that handle small-cap and microcap stocks Asset Managers and financial advisors specializing in speculative and aggressive investments Small-cap and microcap companies interested in building trading volume Investment newsletters and websites specializing in small cap and microcap stocks By approaching the individuals and entities operating in the target markets listed above, we are aggressively marketing our list products as a means of getting in front of millions of investors with a particular interest in small cap and microcap stocks. Our President, Thomas VanBuskirk, has no experience selling list products and has no direct training or experience running a list services company, and as such our President may not be fully aware of many of the specific requirements related to marketing lists. Our President currently devotes approximately 10 hours a week to Company matters and expects to devote approximately 20 to 25 hours a week to Company matters after the completion of this offering. Depending on the success of our Offering, we intend to begin providing our President a salary (See "Use of Proceeds" section on page 16). In the event we do not raise sufficient proceeds in this Offering to provide our President with a salary, he has verbally agreed to continue working without compensation until such time as the Company generates sufficient revenues to warrant paying him a salary. Our Secretary, David Mathias, has no experience in the list industry. Our Secretary is not paid a salary and there are no plans to provide him with a salary in the future. Our Secretary currently devotes approximately 5 hours a week to Company matters and expects to devote approximately 5 hours a week to Company matters after the completion of this offering. Neither Jim Silvester, our Director, nor our President or our Secretary, have agreed to serve as a Director or Officers of the Company at least in part due to a plan, agreement, or understanding that she would solicit, participate in, or facilitate the sale of the enterprise to (or a business combination with) a third party looking to obtain or become a public reporting entity and also confirms that she has no such present intentions. From inception until the date of this filing we have had limited operating activities, primarily consisting of (i) the incorporation of our Company, (ii) development of our business plan, (iii) the initial equity funding by The Owings Group, LLC, (iv) the acquisition of our database of 5.6 million individuals, and (v) initial target marketing of potential clients. On May 10, 2013, MJSC Enterprises, LLC was issued 14,000,000 shares of our common stock, with a par value of $0.001, for the rights to its proprietary database of 5.6 million individuals. On May 10, 2013, The Owings Group, LLC was issued 6,000,000 shares of our common stock, with a par value of $0.001 as consideration for the $27,369 that The Owings Group, LLC spent to have the information in our proprietary database updated. In addition, The Owings Group, LLC provided goodwill consideration in the form of access to its existing professional relationships with potential customers, management-related expertise, rent-free office space, free access to internet and phone service, as well as access to a client relationship management (CRM) database. On May 20, 2013, Flora Nutrients, Inc. acquired 14,000,000 shares of the Company s common stock from MJSC Enterprises, LLC and 6,000,000 shares of the Company s common stock from The Owings Group, LLC. As a result, Flora Nutrients, Inc. currently owns 100% of the Company s issued and outstanding common stock. Our financial statements from inception on May 9, 2013 through May 31, 2013 report no revenues and a net loss of $187,596. Our independent auditor has issued an audit opinion for our Company which includes a statement expressing substantial doubt as to our ability to continue as a going concern. The Company s principal office is located at 10045 Red Run Blvd. suite 140, Owings Mills, MD 21117. Our telephone number is 855-545-0251. We are an emerging growth company within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. For a description of the qualifications and other requirements applicable to emerging growth companies and certain elections that we have made due to our status as an emerging growth company, see RISK FACTORS--RISKS RELATED TO THIS OFFERING AND OUR COMMON STOCK - WE ARE AN EMERGING GROWTH COMPANY AND WE CANNOT BE CERTAIN IF THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS on page 8 of this prospectus. This is a direct participation offering since we are offering the stock directly to the public without the participation of an underwriter. Our President will be solely responsible for selling shares under this offering and no commission will be paid on any sales. There has been no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ( FINRA ) for our common stock to be eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common shares. Under U.S. federal securities legislation, our common stock will be penny stock . Penny stock is any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a potential investor s account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve an investor s account for transactions in penny stocks, the broker or dealer must obtain financial information, investment experience, and objectives of the person, and make a reasonable determination that the transactions in penny stocks are suitable for that person and that the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination. Brokers may be less willing to execute transactions in securities subject to the penny stock rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001583163_borderless_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001583163_borderless_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY As used in this prospectus, references to the Company, we, our , us or Borderless Holdings refer to Borderless Holdings, Inc. unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements, and the notes to the financial statements. Our Company Borderless Holdings, Inc. was incorporated on May 9, 2013 under the laws of the State of Delaware for the purpose of selling gold jewelry. As of the date of this prospectus, we have cash reserves of $0. Although the Company is currently provided free access to office space and telephone and internet service by The Owings Group, LLC, it is anticipated that we will begin to pay for these expenses if we realize 75% participation or higher in this Offering (See "Use od Proceeds" on page 14). As the Company begins to expand and increase its client base, we expect additional administrative and operational costs. We anticipate that some of these costs will be covered revenues from Company operations and the balance will be covered by using proceeds from this Offering. If we are unsuccessful in raising sufficient funds from this Offering, we may need to seek alternative means of funding. We are a development stage company that has not realized any revenues to date. We are in the early stages of developing our business which is to sell 24 karat ( 24k ) gold jewelry. Our plan of operations over the 12 month period following the successful completion of our offering of 2,000,000 shares of our common stock is to (i) develop additional supplier and shipper relationships, (ii) continue to develop and enhance our website at a cost of approximately $20,000 to $90,000, (iii) engage in marketing activities at a cost of approximately $20,000 to $75,000, (iv) pay our President a salary and hire additional sales people (either internally or by utilizing dedicated call centers) at a cost of approximately $45,000 to $130,000, (v) participate in speaking engagements at conferences and trade shows at a cost of up to $20,000, (vi) cover the costs of being a reporting issuer for approximately $15,000 and (vii) set up a new office for approximately $20,000 to $30,000 (See "Plan of Operations" on page 35). Our estimated annual cost of $15,000 for being a reporting issuer under the Securities Exchange Act of 1934 does not include the cost of this offering. We need to raise at least $200,000 through this Offering to satisfy an obligation to Owings-1, LLC for services rendered in relation to this S-1 registration (See Client Services Agreement" in Exhibit 10.1). The $200,000 is due to Owings-1, LLC once this prospectus is declared effective. In the event that we fail to raise sufficient proceeds through this Offering to satisfy this obligation, Owings-1, LLC has verbally agreed to renegotiate or extend the repayment terms of this liability. We need to realize maximum participation in this Offering to implement our complete Plan of Operations. If we are unsuccessful in this offering, we will need a minimum financing of $15,000 over the next 12 months to cover the costs of our quarterly and annual filing requirements. If necessary The Owings Group, LLC, has verbally agreed to provide us with an on demand, non-interest bearing loan to cover these costs. In this event, The Owings Group, LLC has also verbally agreed to continue providing us with office space and access to internet and telephone services free of charge. There is however, no guarantee that Owings-1, LLC will make accommodations in relation to our $200,000 obligation or that The Owings Group, LLC will extend a loan to us or provide free access to office space and internet and telephone service in the event our Offering fails. If we do not realize sufficient participation in our Offering, and are unable to negotiate alternative means of financing, we could be forced to cease operations. Initially, we are only selling 24 karat ( 24k ) gold jewelry bracelets and necklaces - but will consider expanding our product lines as our customer base develops. We do not hold any inventory in an effort to minimize our overhead costs and exposure to fluctuations in the gold price. Our intended market is comprised of both men and women who wear jewelry but simultaneously appreciate the value and universal liquidity of pure gold. We engage our target market, which is nationwide, through websites and email marketing campaigns. Additionally, we are working to develop referral relationships with newsletters and other websites that service demographics encompassed by our target market. There is however, no guarantee that we will be able to form these relationships, or successfully market our 24k gold jewelry through a website or email marketing campaigns, and there is no guarantee that we will be able to sell any jewelry at all. Our President, Seth Peretzman, has limited experience selling jewelry and has no direct training or experience running a jewelry sales company, and as such our President may not be fully aware of many of the specific requirements related to soliciting jewelry. Our President currently devotes approximately 10 hours a week to Company matters and expects to devote approximately 20 to 25 hours a week to Company matters after the completion of this offering. Currently, our President is not compensated for his services. Depending on the success of our Offering, we intend to begin providing our President a salary (Se "Use of Proceeds" section on page 14). In the event we do not raise sufficient proceeds in this Offering to provide our President with a salary, he has verbally agreed to continue working without compensation until such time as the Company generates sufficient revenues to warrant paying him a salary. Our Secretary, David Mathias, has no experience or direct training in the jewelry industry. Our Secretary currently devotes approximately 5 hours a week to Company matters and expects to devote approximately 5 to 10 hours a week to Company matters following the completion of this offering. Currently, our Secretary is not compensated for his services and there is no plan to provide him with a salary following the completion of this Offering. Neither Jim Silvester, our Director, nor Seth Peretzman, our President, nor David Mathias, our Secretary, agreed to serve as a Director or Officer of the Company at least in part due to a plan, agreement, or understanding that they would solicit, participate in, or facilitate the sale of the enterprise to (or a business combination with) a third party looking to obtain or become a public reporting entity and each individual also confirms that he has no such present intentions. From inception until the date of this filing we have had limited operating activities, primarily consisting of (i) the incorporation of our Company, (ii) the development of our business plan, (iii) the initial equity funding by our majority shareholder, (iv) due diligence on potential suppliers of 24k gold jewelry, and (v) developing strategic referral partnerships with investment newsletters and websites catering to our target market. On May 10, 2013, The Owings Group, LLC, was issued 20,000,000 shares of our common stock, with a par value of $0.001, for the commitment to pay $1,000 once our bank account was established, as compensation for $633 in advertising costs The Owings Group, LLC paid on behalf of the Company, and for good will consideration in the form of office space, access to internet and telephone service, the use of a customer relationship management ( CRM ) database, as well as access to its network of professional contacts and relationships. On May 20, 2013, Ehydrogen Solutions, Inc. acquired 20,000,000 shares of the Company s common stock from The Owings Group, LLC. As a result, Ehydrogen Solutions, Inc. currently owns 100% of our issued and outstanding common stock. Our financial statements from inception on May 9, 2013 through May 31, 2013 report no revenues and a net loss of $119,829. Our independent auditor has issued an audit opinion for our Company which includes a statement expressing substantial doubt as to our ability to continue as a going concern. The Company s principal office is located at 10045 Red Run Blvd. suite 140, Owings Mills, MD 21117. Our telephone number is 855-545-0251. We are an emerging growth company within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. For a description of the qualifications and other requirements applicable to emerging growth companies and certain elections that we have made due to our status as an emerging growth company, see RISK FACTORS--RISKS RELATED TO THIS OFFERING AND OUR COMMON STOCK - WE ARE AN EMERGING GROWTH COMPANY AND WE CANNOT BE CERTAIN IF THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS on page 7 of this prospectus. This is a direct participation offering since we are offering the stock directly to the public without the participation of an underwriter. Our President will be solely responsible for selling shares under this offering and no commission will be paid on any sales. There has been no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ( FINRA ) for our common stock to be eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common shares. Under U.S. federal securities legislation, our common stock will be penny stock . Penny stock is any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a potential investor s account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve an investor s account for transactions in penny stocks, the broker or dealer must obtain financial information, investment experience, and objectives of the person, and make a reasonable determination that the transactions in penny stocks are suitable for that person and that the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination. Brokers may be less willing to execute transactions in securities subject to the penny stock rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001583671_science_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001583671_science_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ec9df65f42f9e74c42c3fd116821ea9aea29629f
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND AB CORP. REFERS TO ARGAN BEAUTY CORP. THE FOLLOWING SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK. Because we generated less than $1 billion in total annual gross revenues during our most recently completed fiscal year, we qualify as an emerging growth company under the Jumpstart Our Business Startups ( JOBS ) Act. We will lose our emerging growth company status on the earliest occurrence of any of the following events: 1. On the last day of any fiscal year in which we earn at least $1 billion in total annual gross revenues, which amount is adjusted for inflation every five years; 2. On the last day of the fiscal year of the issuer following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration statement; 3. On the date on which we have, during the previous 3-year period, issued more than $1 billion in non-convertible debt; or 4. On the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b 2 of title 17, Code of Federal Regulations, or any successor thereto. A large accelerated filer is an issuer that, at the end of its fiscal year, meets the following conditions: 1. It has an aggregate worldwide market value of the voting and non-voting common equity held by its non-affiliates of $700 million or more as of the last business day of the issuer's most recently completed second fiscal quarter; 2. It has been subject to the requirements of section 13(a) or 15(d) of the Act for a period of at least twelve calendar months; and 3. It has filed at least one annual report pursuant to section 13(a) or 15(d) of the Act. As an emerging growth company, exemptions from the following provisions are available to us: 1. Section 404(b) of the Sarbanes-Oxley Act of 2002, which requires auditor attestation of internal controls; 2. Section 14A(a) and (b) of the Securities Exchange Act of 1934, which require companies to hold shareholder advisory votes on executive compensation and golden parachute compensation; 3. Section 14(i) of the Exchange Act (which has not yet been implemented), which requires companies to disclose the relationship between executive compensation actually paid and the financial performance of the company; 4. Section 953(b)(1) of the Dodd-Frank Act (which has not yet been implemented), which requires companies to disclose the ratio between the annual total compensation of the CEO and the median of the annual total compensation of all employees of the companies; and 5. The requirement to provide certain other executive compensation disclosure under Item 402 of Regulation S-K. Instead, an emerging growth company must only comply with the more limited provisions of Item 402 applicable to smaller reporting companies, regardless of the issuer s size. Pursuant to Section 107 of the JOBS Act, an emerging growth company may choose to forgo such exemption and instead comply with the requirements that apply to an issuer that is not an emerging growth company. We have elected to maintain our status as an emerging growth company and take advantage of the JOBS Act provisions. ARGAN BEAUTY CORP. We were incorporated in the State of Nevada on April 15, 2013. Argan Beauty Corp. (or "the company" or "AB CORP.") is planning to be a distributor of Argan oil and Argan oil products to stores, spas, massage therapy offices and individuals in Germany. We intend to bring the 100% pure and organic Argan Oil and skin products made with Argan Oil directly from the manufacturers in Morocco to Germany and in the future to the rest of Europe. We expect to generate revenues from sales of our products to individual customers and commercial customers such as spas, stores and massage therapy offices. Both individual and commercial customers will be able to order our products by telephone, our website www.arganbeautycorp.com using our special contact form, or directly at an arranged meeting with our representative. We will import 100% pure Argan Oil and all the skin care products made with Argan Oil straight from the manufacturer in Morocco and deliver them to our clients in Germany without the help of commission base agents. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we need at least $10,000 to pay for the expenses of this offering and $10,000 for professional fees we expect to incur in the next twelve months. As such we require a minimum of $20,000 for the next twelve months. We estimate that our monthly burn rate initially will be approximately $1,667. This is a simple monthly estimate of our professional expenses plus general and administrative expenses needed to stay in business; it is calculated by dividing $20,000 by 12 months. Being a development stage company, we have a very limited operating history and it is difficult to gauge what expenses we will incur. However our present capital will not be sufficient to fund our operation for any period of time at this estimated burn rate. We depend on funds from this public offering. If we raise less than 25% of the offering, we will not have enough money to cover our offering expenses and professional fees necessary to remain current with our reporting obligations. When we will require additional funds we will attempt to raise them through sale of additional common stock or through director loans. We do not have any arrangements to raise additional funds at this time. In the event we fail to raise sufficient funds Mr. Gorelik plans to loan the money to the company. We do not have any plans to seek a business combination with an unidentified entity in the even we are not successful in our plan of operations. A more detailed breakdown of costs is included in our plan of operations. The month on which we will run out of funds will depend on the amount of funds we raise in this offering. Our principal executive office is located at Faraday Str. 31, Leipzig, Germany, 04159. Our telephone number is 49 (0) 173 8264 717. From inception on April 15, 2013 until the date of this filing, we have had limited operating activities. Our financial statements from inception on April 15, 2013 through August 31, 2013 report no revenues and a net loss of $ 6,732 . Our independent registered public accounting firm has issued an audit opinion for AB CORP. that includes a statement expressing substantial doubt as to our ability to continue as a going concern. We do not anticipate earning revenues until such time as we enter into commercial operation. Since we are presently in the development stage of our business, we can provide no assurance that we will successfully sell our products. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. THE OFFERING The Issuer: ARGAN BEAUTY CORP. Securities Being Offered: 4,000,000 shares of common stock Price Per Share: $0.02 Duration of the Offering: The offering shall terminate on the earlier of (i) the date when the sale of all 4,000,000 shares is completed, (ii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 4,000,000 shares registered under the Registration Statement of which this Prospectus is part; or March 31, 2014. Net Proceeds $80,000 assuming the sale of all offered shares, of which there is no assurance. Securities Issued and Outstanding: There are 3,000,000 shares of common stock issued and outstanding as of the date of this prospectus. 3,000,000 shares held by our President, Vitaliy Gorelik. Registration Costs We estimate our total offering registration costs to be approximately $10,000.
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diff --git a/parsed_sections/prospectus_summary/2013/CTTRF_controlado_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CTTRF_controlado_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CTTRF_controlado_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2013/FATE_fate_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/FATE_fate_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/FATE_fate_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/IPWR_ideal_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/IPWR_ideal_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/IPWR_ideal_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/KMDA_kamada-ltd_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/KMDA_kamada-ltd_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/KMDA_kamada-ltd_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/PLUG_plug_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/PLUG_plug_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..957cc8abe0825d52e5d46a1e7e0563862c5d5d91
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/PLUG_plug_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes included elsewhere in this prospectus. You should also consider, among other things, the matters described under Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, in each case appearing elsewhere in this prospectus. Unless otherwise mentioned or unless the context requires otherwise, all references to Plug Power, we, us, our, the company or similar designations refer to Plug Power Inc. and its subsidiaries. This prospectus includes trademarks, service marks and trade names owned by us or other companies. All trademarks, service marks and trade names included or incorporated by reference into this prospectus or any related free writing prospectus are the property of their respective owners. PLUG POWER INC. Background We are a leading provider of alternative energy technology focused on the design, development, commercialization and manufacture of fuel cell systems for the industrial off-road (forklift or material handling) market. We are focused on proton exchange membrane, or PEM, fuel cell and fuel processing technologies and fuel cell/battery hybrid technologies, from which multiple products are available. A fuel cell is an electrochemical device that combines hydrogen and oxygen to produce electricity and heat without combustion. Hydrogen is derived from hydrocarbon fuels such as liquid petroleum gas, or LPG, natural gas, propane, methanol, ethanol, gasoline or biofuels. Hydrogen can also be obtained from the electrolysis of water. Hydrogen can be purchased directly from industrial gas providers or can be produced on-site at consumer locations. We concentrate our efforts on developing, manufacturing and selling our hydrogen-fueled PEM GenDrive products on commercial terms for industrial off-road (forklift or material handling) applications, with a focus on multi-shift high volume manufacturing and high throughput distribution sites. We have previously invested in development and sales activities for low-temperature remote-prime power GenSys products and our GenCore product, which is a hydrogen fueled PEM fuel cell system to provide back-up power for critical infrastructure. While we will continue to service and support GenSys and/or GenCore products on a limited basis, our current main focus is our GenDrive product line. We sell our products worldwide, with a primary focus on North America, through our direct product sales force, original equipment manufacturers, or OEMs, and their dealer networks. We sell to businesses, government agencies and commercial consumers. Business Strategy We are committed to developing effective, economical and reliable fuel cell products and services for businesses, government agencies and commercial consumers. Building on our substantial fuel cell application and product integration experience, we are focused on generating strong relationships with customers who value increased reliability, productivity, energy security and a sustainable future. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell or accept an offer to buy these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any jurisdiction where such offer or sale is not permitted. Subject to Completion, Dated February 13, 2013 PROSPECTUS 8,012,820 Shares of Common Stock Warrants to Purchase 8,012,820 Shares of Common Stock We are selling 8,012,820 shares of our common stock and warrants to purchase up to 8,012,820 shares of our common stock (and the shares of common stock issuable from time to time upon exercise of these warrants). Each share of common stock is being sold together with a warrant to purchase one share of common stock at an exercise price of $ per whole share of common stock and no warrant will be issued in the offering, including in connection with the over-allotment option described below, without an accompanying share of common stock. The shares of common stock and warrants will be issued separately. Our common stock is traded on the NASDAQ Capital Market under the symbol PLUG. On February 11, 2013, the last reported sale price of our common stock on the NASDAQ Capital Market was $0.39. There is no established public trading market for the warrants, and we do not expect a market to develop. In addition, we do not intend to apply for listing of the warrants on any national securities exchange or other nationally recognized trading system. INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD REVIEW CAREFULLY THE RISKS AND UNCERTAINTIES REFERENCED UNDER THE HEADING RISK FACTORS BEGINNING ON PAGE 12. Per Share Per Warrant Total Public offering price $ $ $ Underwriting discounts and commissions(1) $ $ $ Proceeds, before expenses, to Plug Power Inc. $ $ $ (1) We have agreed to reimburse the underwriters for certain of their expenses. See Underwriting on page 90 of this prospectus for a description of the compensation to be received by the underwriters. We have granted the underwriters a 45-day option to purchase up to 1,201,923 additional shares of common stock and/or additional warrants to purchase up to 1,201,923 shares of common stock from us at the public offering price for each security, less underwriting discounts and commissions, to cover over-allotments, if any. See Underwriting on page 90 of this prospectus for a description of the over-allotment option. The underwriters expect to deliver the shares and warrants on or about , 2013. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Roth Capital Partners Northland Capital Markets This prospectus is dated , 2013 Table of Contents Our business strategy leverages our unique fuel cell application and integration knowledge to identify early adopter markets for which we can design and develop innovative systems and customer solutions that provide superior value, ease-of-use and environmental design. We have made significant progress in our analysis of the material handling market. We believe we have developed reliable products which allow the end customers to eliminate incumbent power sources from their operations, and realize their sustainability objectives through clean energy alternatives. Our strategy is to focus our resources on the material handling market with our GenDrive product line, which represents an alternative to lead-acid battery configurations. Our strategy also includes the following objectives: decrease product costs by leveraging the supply chain, lower manufacturing costs, improve system reliability, expand our sales network to effectively reach more of our targeted customers and provide customers with high-quality products, service and post-sales support experience. Our longer-term objectives are to deliver economic, social, and environmental benefits in terms of reliable, clean, cost-effective fuel cell solutions and, ultimately, sustainability. We believe continued investment in research and development is critical to the development and enhancement of innovative products, technologies and services. In addition to evolving our direct hydrogen fueled systems, we continue to capitalize on our investment and expertise in power electronics, controls, and software design. Products We sell and continue to develop a range of fuel cell products to replace lead-acid batteries in material handling vehicles and industrial trucks for some of North America s largest distribution and manufacturing businesses. Our primary product line is GenDrive, a hydrogen fueled PEM fuel cell system to provide power to industrial vehicles. We are focusing our efforts on material handling applications (forklifts) at multi-shift high volume manufacturing and high throughput distribution sites where our products and services provide a unique combination of productivity, flexibility and environmental benefits. In October, 2011 we introduced our next generation GenDrive products. These next generation fuel cell units include a simplified architecture featuring 30% fewer components and a scalable design for low power applications, giving customers greater flexibility in managing their deployments. By the third quarter of 2012, the majority of units produced and shipped were based on the simplified architecture. During the fiscal year ended December 31, 2012, we received new orders from Stihl, Mercedes Benz, Lowe s, Carter s and Ace Hardware. We also experienced add-on orders from Walmart, P&G, Coca-Cola, Sysco, Wegmans, Kroger and BMW. We continue to develop and monitor future iterations of our products aligned with our evolving product roadmap. According to Fuel Cells Bulletin, an industry publication, we had 85% world-wide market share in the fuel cell powered material handling industry as of September 2010. Markets/Geography & Order Status Our commercial sales for GenDrive products are in the material handling market, which primarily consist of large fleet, multi-shift operations in high-volume manufacturing and high-throughput distribution centers. We sell our GenDrive units at prices that range from $12,000 to $35,000 per unit. In 2012, all of our GenDrive product installations were in North America. We shipped 873 units and received 353 orders for our GenDrive product during the nine months ended September 30, 2012, representing $9.7 million in orders from material handling customers. We shipped 1,024 units and received 2,503 orders for our GenDrive product during the year ended December 31, 2011, representing $46.1 million in orders from material handling customers; $18.1 million of which were received during the fourth Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+As filed with the Securities and Exchange Commission on July 25 , 2013 Registration Number: 333-188575 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form S-1/A (Amendment No. 4 ) REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 PORT OF CALL ONLINE INC. (Exact Name of Registrant As Specified in its Charter) Nevada 4712 27-2060863 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) Nevada Agency and Trust Company 40 Warren Street, Floor 3 50 West Liberty Street, Suite 880 Charlestown, MA, 02129-3608 Reno, Nevada 89501 (617) 459-6031 (775) 322-0626 (Address and telephone number of (Name, address and telephone principal executive offices) of agent for service) With copies to: Synergen Law Group, APC Attention: Karen A. Batcher, Esq 819 Anchorage Place, Suite 28 Chula Vista, CA 91914 Tel. 619.475.7882 Fax 866.352.4342 Approximate date of commencement of proposed sale to public: As soon as practical after the effective date of this Registration Statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities At registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Table of Contents SUMMARY To understand this offering fully, you should read the entire prospectus carefully, including the risk factors beginning on page 5 and the financial statements. Port Of Call Online Inc. We were incorporated on March 2, 2010 under the laws of the state of Nevada. Our principal offices are located at 40 Warren Street, 3rd floor, Charlestown, MA 02129-3608. Our telephone number is (617) 459-6031. Port of Call Online Inc. intends to create a web-based service that will offer boaters an easy, convenient, fun and easy to use online resource to help them plan and organize their boating trips. The registrant s intended website will provide listings for a plethora of product and service providers of interest to the boating traveler, including available moorage facilities, along with a full presentation of information important to boaters, such as location, address, phone number, email, Dock information, availability of fuel and power, pricing, along with other applicable information. The registrant s intended website will also provide information relating to restaurants in the immediate area or further away, attractions either within walking distance, or general attractions in the area, accommodation. repair services, boat rental, yacht brokerage services, maps. As well as a variety of other services such as grocery locations, food delivery services, cleaning services, car rental and nanny services. The targeted market includes boaters who go on vacation, towing their boats, those that travel using their boats, and others who wish a boating experience while on their vacation. We are still in our development stage and plan and cannot commence business operations on our website until its completion. The Port of Call Online website has not yet been developed, and substantial additional development work and funding will be required before the website can be fully operational. The first phase of our plan of operations is to design and construct the initial Port of Call Online website and initiate its initial marketing strategies. Expenses related to stage one are expected to be approximately $15,000 and we expect to have this stage of the websites development completed by September of 2013. The registrant currently has sufficient capital to complete this phase of its plan of operations. The second phase of our plan of operations is the development of critical mass and additional marketing efforts. The registrant currently has sufficient capital to begin the second phase of its plan of operations which is estimated to employ one individual for $2,000 per month. We can provide no assurance that we will be successful in our planned development of our website. The third phase of our plan of operations is to establish a presence in additional market areas and enhance marketing activities. The implementation of this third phase is dependent on the success of the first two phases The registrant currently does not expect to have sufficient capital to proceed with this phase of its plan of operations. The registrant currently does not have any arrangements for financing and may not be able to obtain financing when required. The registrant believes the only source of funds that would be realistic is through a loan from our president or the sale of equity capital. Table of Contents If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, a non-accelerated filer, or a smaller reporting company. Large accelerated filer o Accelerated Filer o Non-accelerated filer o Smaller Reporting Company x CALCULATION OF REGISTRATION FEE TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED AMOUNT TO BE REGISTERED PROPOSED MAXIMUM OFFERING PRICE PER SHARE (1) PROPOSED MAXIMUM AGGREGATE OFFERING PRICE (1) AMOUNT OF REGISTRATION FEE (1) Common Stock (2) 1,600,000 shares $0.04 $64,000 $8.73 (1) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended. (2) Represents common stock being sold on behalf of selling shareholders. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. Table of Contents We have not earned any revenues to date. We do not anticipate earning revenues until we have completed our website and commenced marketing activities. As of March 31, 2013, we had $36,250 cash on hand and no liabilities. Accordingly, our working capital position as of December 31, 2012 was $36,250. Since our inception through March 31, 2013, we have incurred a net loss of $10,400. Our net loss is due to lack of revenues to offset our expenses and the professional fees related to the creation and operation of our business. Our auditor has expressed substantial doubt about our ability to continue as a going concern given our lack of operating history and due to the fact that to date we have had no revenues. Our fiscal year ended is December 31. Although we were only recently incorporated and have not yet commenced substantive operations, we believe that conducting this Offering will allow the Company added flexibility to raise capital in today's financial climate. We believe that investors in today's markets demand full transparency and by our registering this Offering and becoming a reporting company, we will be able to capitalize on this fact. While there is currently no public market for the Company's common stock, management believes that the Company will meet all requirements to be quoted on the OTC market, and even though the Company s common stock will likely will be a penny stock, becoming a reporting company will provide us with enhanced visibility and give us a greater possibility to provide liquidity to our shareholders. The Company is a Shell Company as defined by as defined in Rule 405. As such no shares will be eligible to be sold or transferred under Rule 144 until in excess of 1 year from the filing of the equivalent of Form 10 information by the Company with the SEC. The selling shareholders in this offering are underwriters. The Offering Securities Being Offered Up to 1,600,000 common shares. Sales by Selling Shareholders The sales price to the public is fixed at 0.04 per share for the duration of the offering. We are registering common shares on behalf of the selling shareholders in this prospectus. We will not receive any cash or other proceeds in connection with the subsequent sales. We are not selling any common shares on behalf of selling shareholders and have no control or affect on the selling shareholders. Table of Contents Securities Issued and to be Issued 3,050,000 shares of our common stock are issued and outstanding as of the date of this prospectus. All of the common stock to be sold under this prospectus will be sold by existing shareholders and thus there will be no increase in our issued and outstanding shares as a result of this offering. The issuance to the selling shareholders was exempt from registration afforded by Section 4(2) and/or Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws. Market for our common stock. Our common stock is presently not traded on any market or securities exchange and we have not applied for listing or quotation on any public market. We intend to have a market maker file an application for our common stock to be quoted on the OTC Bulletin Board and/or the OTCQB. However, we do not have a market maker that has agreed to file such application. If our securities are not quoted on the OTC Bulletin Board or the OTCQB, a security holder may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our securities. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Summary Financial Information March 31, 2013 December 31, 2012 Balance Sheet Data (unaudited) (audited) Cash $ 36,250 $ 39,500 Total Current Assets $ 36,250 $ 39,500 Liabilities $ - $ - Total Stockholder s Equity $ 36,250 $ 39,500 From Inception (March 2, 2010) to March 31, 2013 Statement of Loss and Deficit (unaudited) Revenue $ - Net Loss for the Period $ 10,400 Table of Contents
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+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus or in the documents incorporated by reference into this prospectus. It may not contain all of the information that is important to you or that you should consider before investing in our securities. Before making an investment decision, you should read this entire prospectus carefully, including Risk Factors and the documents incorporated by reference into this prospectus, which are described under Where You Can Find More Information and Incorporation of Certain Information by Reference. The Company Overview We own and manage skilled nursing facilities and assisted living facilities in the states of Alabama, Arkansas, Georgia, Missouri, North Carolina, Ohio, Oklahoma, and South Carolina. As of September 30, 2013, we own, lease and manage 47 facilities consisting of 43 skilled nursing facilities, three assisted living facilities and one independent living/senior housing facility which total approximately 4,781 beds/units. Our facilities provide a range of health care services to patients and residents, including, but not limited to, skilled nursing and assisted living services, social services, various therapy services and other rehabilitative and healthcare services for both long-term residents and short-stay patients. As of September 30, 2013, of the total 47 facilities, we owned and operated 26 facilities, leased and operated nine facilities, managed 11 facilities for third parties and had one consolidated variable interest entity. Our skilled nursing and assisted living facilities provide services to individuals needing long-term care in a nursing home or assisted living setting. We provide a full complement of administrative services as well as consultative services that permit our local facility leadership teams to better focus on the delivery of healthcare services. We also provide these services to unaffiliated third party long-term care operators and/or owners with whom we enter into management contracts. We currently provide these services to two unaffiliated facility owners. Each of our facilities is led by highly dedicated individuals who are responsible for key operational decisions at their facilities. Facility leaders and staff are trained and motivated to pursue superior clinical outcomes, high patient and family satisfaction, operating efficiencies and financial performance at their facilities. In addition, our facility leaders are enabled and motivated to share real-time operating data and otherwise benchmark clinical and operational performance against their peers in other facilities in order to improve clinical care, maximize patient satisfaction and augment operational efficiencies, promoting the sharing of best practices. Much of our historical growth can be attributed to our expertise in acquiring under-performing facilities and transforming them into market leaders in clinical quality, staff competency, employee loyalty and financial performance. We intend to continue to grow our revenue and earnings by: focusing on efficiencies in our operations and internal growth; increasing the proportion of sub-acute patients within our skilled nursing facilities; expanding clinical programs within our existing facilities; continuing to acquire additional facilities in existing and new markets; and evaluating and potentially targeting the acquisition of complementary businesses which provide services to skilled nursing facilities. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ADCARE HEALTH SYSTEMS, INC. (Exact name of registrant as specified in its charter) Georgia 8051 31-1332119 (State or other jurisdiction of incorporation or organization) (Preliminary Standard Industrial Classification Code Numbers) (I.R.S. Employer Identification Number) 1145 Hembree Road Roswell, Georgia 30076 (678) 869-5116 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Ronald W. Fleming Chief Financial Officer AdCare Health Systems, Inc. 1145 Hembree Road Roswell, Georgia 30076 (678) 869-5116 ext. 122 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copy to: Lori A. Gelchion, Esq. Rogers & Hardin LLP 2700 International Tower 229 Peachtree Street, N.E. Atlanta, Georgia 30303 (404) 522-4700 Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Growth Strategy Our objective is to be the provider of choice for health care and related services to the elderly in the communities in which we operate. We intend to grow our business through numerous initiatives. We expect to continue to increase occupancy rates and revenue per occupied unit at our facilities. We believe that our current operations serve as the foundation on which we can build a large fully-integrated senior living company. We intend to target attractive geographic markets by using our existing infrastructure and operating model to provide a broad range of high quality care in a cost-efficient manner. Organic Growth. We intend to focus on improving our operating margins within all of our facilities. We continually seek to maintain and improve our operating margins by: increasing the proportion of higher revenue sub-acute health care services delivered at our skilled nursing facilities; attracting new residents through the on-site marketing programs focused on residents and family members; actively seeking referrals from professional community outreach sources, including area religious organizations, senior social service programs, civic and business networks, as well as the medical community; and continually refurbishing and renovating our facilities. Pursue Strategic Acquisitions. We believe that our current infrastructure and extensive contacts within the industry will continue to provide us with the opportunity to evaluate numerous acquisition opportunities. We believe there is a significant opportunity for growth with a private to public arbitrage and opportunity to increase our operating margins by evaluating and potentially targeting the acquisition of complementary businesses which provide services to skilled nursing facilities. Fragmentation in the Industry Provides Acquisition and Consolidation Opportunities. The senior living industry is highly fragmented and we believe that this provides significant acquisition and consolidation opportunities. We believe that the limited capital resources available to many small, private operators impede their growth and exit prospects. We believe that we are well positioned to strategically approach small private operators and offer them exit strategies which are not currently available as well as the ability to grow their business. Emphasize Employee Training and Retention. We devote special attention to the hiring, screening, training, supervising and retention of our employees and caregivers. We have adopted comprehensive recruiting and screening programs for management positions that utilize corporate office team interviews and background and reference checks. We believe our commitment to, and emphasis on, quality hiring practices, employee training and retention differentiates us from many of our competitors. Positioned for Growth. As part of our growth strategy, we endeavor to acquire independently owned, often times family operated, skilled nursing facilities. We then utilize our proven clinical management and marketing programs to increase the proportion of more clinically complex sub-acute patients. These patients generate higher revenue per patient day. In many situations these patients are also more profitable. Additionally we are able to leverage our enhanced purchasing power and increase operating profit by Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE ______________________________________________________________________________ Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Offering Price Per Security(2) Proposed Maximum Aggregate Offering Price(2) Amount of Registration Fee(2) Common Stock, no par value 3,153,647 $4.25 13,325,888 $1,727 (1) Represents 3,135,503 shares of the Registrant s common stock issuable upon exercise of warrants. Pursuant to Rule 416 under the Securities Act of 1933, as amended, the Registrant is registering an indeterminate number of shares of common stock issuable upon exercise of such warrants in connection with stock splits, stock dividends, recapitalizations or similar events, but not including additional shares which may be issued as a result of an adjustment in the conversion rate upon a dilutive issuance. No additional registration fee has been paid for these additional shares of common stock. (2) Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(c) under the Securities Act of 1933, as amended, based on the average of the high and low prices of the Registrant s common stock, as reported on the NYSE MKT on December 24, 2013, which was $4.25 per share. ___________________________ The Registrant hereby amends this Registration Statement on such dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. providing more cost effective supplies and ancillary services. These management practices also assist in providing quality care to our patients and residents. Pursue Management Contracts. We intend to pursue management opportunities for senior living communities. We believe that our management infrastructure and proven operating track record will allow us to take advantage of increased opportunities in the senior living market for new management contracts for third-party operators. Operating Strategy Our operating philosophy is to provide affordable, quality care to our patients and residents. We execute this strategy by empowering and supporting our local leadership teams at the facilities. These facility teams are supported by seasoned regional staff that provide consultative assistance from both a clinical and operations perspective. Additionally, we provide centralized back office administrative services to the facilities such as accounting, payroll and accounts payable processing, purchasing, and information technology support. Centralizing these non-patient centric activities is more efficient and cost effective and frees up facility staff to focus on patient care. Increase Revenues and Profitability at Existing Facilities. Our strategy includes increasing facility revenues and profitability levels through increasing occupancy levels, increasing the percentage of sub-acute patients, maximizing reimbursement rates as appropriate, providing additional services to our current residents, and containing costs. Ongoing initiatives to promote higher occupancy levels and appropriate payor and case mixes at our senior living facilities include corporate programs to promote specialized care and therapy services as well as initiatives to improve customer service and develop safety programs to improve worker compensation insurance rates. Offer Services Based on Level of Care. Our range of products and services is continually expanding to meet the evolving needs of our patients and residents. We have developed a variety of special clinical programs and care offerings that are responsive to particular geographic markets. Improve Operating Efficiencies. We actively monitor and manage our operating costs. By having an established portfolio of properties, we believe that we have a platform to achieve operating efficiencies through economies of scale in the purchase of bulk items, such as food, and in the spreading of fixed costs, such as corporate overhead, over a larger revenue base, and the ability to provide more effective management supervision and financial controls. Increase Occupancy Through Emphasis on Marketing Efforts. We emphasize strong corporate support for the marketing of our various local facilities. At a local level, our sales and marketing efforts are designed to promote higher occupancy levels and optimal payor mix. Management believes that the long-term care industry is fundamentally a local industry in which both patients and residents and the referral sources for them are based in the immediate local geographic area of the facility. Promote an Internally-Developed Marketing Program. We focus on the identification and provision of services needed by the community. We assist each facility administrator in analysis of local demographics and competition with a view toward complementary service development. Our belief is that this locally based marketing approach, coupled with strong corporate monitoring and support, provides an advantage over regional competitors. Operate the Facility Based Management Model. We hire an administrator/manager and director of nursing for each of our skilled nursing facilities and provide them with autonomy, responsibility and The information in this prospectus is not complete and may be changed. The selling shareholders may not sell these securities pursuant to this prospectus until the registration statement of AdCare Health Systems, Inc. filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED DECEMBER 31, 2013 PRELIMINARY PROSPECTUS 3,153,647 SHARES OF COMMON STOCK OF ADCARE HEALTH SYSTEMS, INC. This prospectus relates to the resale, from time to time, by the selling shareholders identified in this prospectus under Selling Shareholders of up to: 714,136 shares of common stock issuable upon exercise of warrants issued by us to investors in a financing transaction in September 2010, with a current exercise price of $3.57 per share which expires on March 13, 2014 (the 2010 Warrants ); 2,364,511 shares of common stock issuable upon exercise of warrants issued by us to certain of our officers and directors, consultants, placement agents, vendors and other service providers in connection with services rendered to us (the Service Warrants ); and 75,000 shares of common stock issuable upon exercise of a warrant issued by us in partial settlement of certain claims alleged by a placement agent and its affiliates, with a current exercise price of $3.96 per share (the Settlement Warrant and, together with the 2010 Warrants and the Service Warrants, the Warrants ). The shares are being offered by the selling shareholders identified in this prospectus under Selling Shareholders. We are not selling any shares of common stock under this prospectus and will not receive any proceeds from the sale of shares by the selling shareholders. The selling shareholders will bear all commissions and discounts, if any, attributable to the sale of the shares. We will bear all costs, expenses and fees in connection with the registration of the shares. The selling shareholders may sell the shares of the common stock offered by this prospectus from time to time on terms to be determined at the time of sale through ordinary brokerage transactions or through any other means described in this prospectus under Plan of Distribution. The prices at which the selling shareholders may sell the shares will be determined by the prevailing market price for the shares or in negotiated transactions. The common stock is traded on the NYSE MKT under the symbol ADK. On December 26, 2013, the last reported sale of the common stock on the NYSE MKT was $4.27 per share. accountability. We believe this allows us to attract and retain higher quality administrators and directors of nursing. This leadership team manages the day-to-day operations of each facility, including oversight of the quality of care, delivery of resident services, and monitoring of the financial performance and marketing functions. We actively recruit personnel to maintain adequate staffing levels at our existing facilities and provide financial and budgeting assistance for our administrators, directors of nursing and department managers. The Offering Common stock offered by us None Common stock offered by selling shareholders The prospectus covers the resale, from time to time, by the selling shareholders identified in this prospectus under Selling Shareholders of up to: 714,136 shares of common stock issuable upon exercise of the 2010 Warrants; 2,364,511 shares of common stock issuable upon exercise of the Service Warrants; and 75,000 shares of common stock issuable upon exercise of the Settlement Warrant. Common stock outstanding immediately prior to the offering, as of December 26, 2013 16,016,373 shares (1) Common stock outstanding immediately after the offering 19,170,020 shares (1) Use of Proceeds We will not receive any proceeds from the resale by the selling shareholders of the common stock offered by this prospectus. We will receive proceeds from the exercise of the Warrants, if they are exercised on a cash basis. We intend to use any proceeds from the exercise of the Warrants for working capital and other general corporate purposes.
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY This summary highlights the information contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and financial statements set forth elsewhere herein or incorporated by reference herein. Because this is only a summary, it does not contain all of the information that may be important to you. For a more complete understanding of the information that you may consider important in making your investment decision, we encourage you to read this entire prospectus and the information incorporated by reference herein. Business Overview Ubiquiti Networks develops high performance networking technology for service providers and enterprises. Our technology platforms focus on delivering highly-advanced and easily deployable solutions that appeal to a global customer base in underserved and underpenetrated markets. Our differentiated business model has enabled us to break down traditional barriers such as high product and network deployment costs and offer solutions with disruptive price-performance characteristics. This differentiated business model, combined with our innovative proprietary technologies, has resulted in an attractive alternative to traditional high touch, high-cost providers, allowing us to advance the market adoption of our platforms for ubiquitous connectivity. We offer a broad and expanding portfolio of networking products and solutions for service providers and enterprises. Our service provider product platforms provide carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing. Our enterprise product platforms provide wireless LAN infrastructure, video surveillance products, and machine-to-machine communication components. We believe that our products are highly differentiated due to our proprietary software protocol innovation, firmware expertise, and hardware design capabilities. This differentiation allows our portfolio to meet the demanding performance requirements of video, voice and data applications at prices that are a fraction of those offered by our competitors. As a core part of our strategy, we have developed a differentiated business model for marketing and selling high volumes of carrier and enterprise-class communications platforms. Our business model is driven by a large, growing and highly engaged community of service providers, distributors, value added resellers, systems integrators and corporate IT professionals, which we refer to as the Ubiquiti Community. The Ubiquiti Community is a critical element of our business strategy as it enables us to drive: Rapid customer and community driven product development. We have an active, loyal community built from our customers that we believe is a sustainable competitive advantage. Our solutions benefit from the active engagement between the Ubiquiti Community and our development engineers throughout the product development cycle, which eliminates long and expensive multistep internal processes and results in rapid introduction and adoption of our products. This approach significantly reduces our development costs and time to market. Scalable sales and marketing model. We do not currently have, nor do we plan to hire, a direct sales force, but instead utilize the Ubiquiti Community to drive market awareness and demand for our products and solutions. This community-propagated viral marketing enables us to reach underserved and underpenetrated markets far more efficiently and cost-effectively than is possible through traditional sales models. Leveraging the information transparency of the Internet allows customers to research, evaluate and validate our solutions with the Ubiquiti Community and via third party web sites. This allows us to operate a scalable sales and marketing model and effectively create awareness of our brand and products. Word of mouth referrals from the Ubiquiti Community generate high quality leads for our distributors at relatively little cost. Table of Contents The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we and the selling stockholders are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JUNE 3, 2013 7,700,000 Shares Common Stock Certain stockholders of Ubiquiti Networks, Inc. are offering 7,700,000 shares of common stock. We will not receive any proceeds from the sale of shares to be offered in this offering. Our common stock is listed on The NASDAQ Global Select Market under the symbol UBNT. On May 31, 2013, our common stock on The NASDAQ Global Select Market was $18.91 per share. Investing in our common stock involves risks. See Risk Factors on page 10. Price to Public Underwriting Discounts and Commissions(1) Proceeds to Selling Stockholders Per Share $ $ $ Total $ $ $ (1) We have agreed to reimburse the underwriters for certain expenses in connection with this offering. See Underwriting. Certain selling stockholders have granted the underwriters the right to purchase up to 1,155,000 additional shares of common stock at the public offering price, to cover over-allotments. Delivery of the shares of common stock will be made on or about , 2013 Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Credit Suisse BofA Merrill Lynch Raymond James JMP Securities BMO Capital Markets Wunderlich Securities The date of this prospectus is , 2013 Table of Contents Self-sustaining product support. The engaged members of the Ubiquiti Community have enabled us to foster a large, cost efficient, highly-scalable and, we believe, self-sustaining mechanism for rapid product support and dissemination of information. By reducing the cost of development, sales, marketing and support we are able to eliminate traditional business model inefficiencies and offer innovative solutions with disruptive price performance characteristics to our customers. For the nine months ended March 31, 2013 and the years ended June 30, 2012, 2011 and 2010, our revenue was $219.6 million, $353.5 million, $197.9 million and $137.0 million, respectively. In the same periods, we generated a net income (loss) of $51.6 million, $102.6 million, $49.7 million and $(5.5) million, respectively. Our net loss in the fiscal year ended June 30, 2010 reflected a one-time compensation charge of $35.9 million related to a repurchase of our common stock and options in connection with the sale of our Series A preferred stock, which we refer to collectively as the Summit transaction, and a $1.6 million charge for a regulatory export compliance issue. In this prospectus, we refer to the fiscal years ended June 30, 2012, 2011 and 2010 as fiscal 2012, fiscal 2011 and fiscal 2010, respectively. Industry Overview Internet traffic worldwide has grown rapidly in recent years, driven by an increase in the number of users, increasing mobility of those users and high bandwidth applications, such as video, audio, cloud-based applications, online gaming and social networking. According to Cisco Visual Networking Index, global Internet protocol, or IP, traffic is expected to increase from 30,734 petabytes, or PB, per month in 2011 to 110,282 PB per month in 2016, representing a 29% CAGR over that period. Wired networking solutions have traditionally been used to address increasing consumer and enterprise bandwidth needs. However, the high initial capital requirements and ongoing operating costs and long market lead times associated with building and installing infrastructure for wired networks has severely limited the widespread deployment of these networks in underserved and underpenetrated markets. Wireless networks are emerging as an attractive alternative for addressing both the broadband access needs of underserved and underpenetrated markets in both emerging and developed countries. Underserved and underpenetrated markets. There exists a significant market opportunity in both emerging and developed economies. In unconnected emerging markets, the lack of an established network infrastructure and the high initial deployment costs associated with traditional wired network infrastructure build-outs has encouraged adoption of wireless networking infrastructure. In under-connected markets, bandwidth demand exceeds either the available capacity from existing infrastructure or the affordable supply of new infrastructure, resulting in an attractive market opportunity for wireless systems to bolster connectivity. Additionally, we believe there is a large market opportunity in connected markets serving customers that want to deploy reliable, scalable and customizable wireless networks and whose primary buying criterion is based on price-performance characteristics. Limitation of existing solutions. Existing service provider wireless networking technologies have been developed to satisfy the increasing demand for broadband access, support mobility and provide the performance and reliability demanded by customers. According to Gartner, aggregate end-user spending on wireless networking equipment for Enterprise WLAN, wireless broadband access, and LTE solutions, is expected to grow from $10.4 billion in 2012 to $41.3 billion in 2017, representing a CAGR of 32%. However, these existing solutions based upon wired, satellite or cellular technologies, often fail to meet the price-performance requirements of fixed wireless networking in emerging markets, rural markets, or price-sensitive markets which in turn has led to low penetration of wireless broadband access and large populations of unaddressed users in Table of Contents TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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+Prospectus Summary This summary highlights information contained elsewhere in this prospectus. This summary is not complete and does not contain all the information that should be considered before investing in our common stock. Investors should read the entire prospectus carefully, including the more detailed information contained herein under the "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" sections and our consolidated financial statements and the notes to those financial statements. As used in this prospectus, unless the context otherwise requires, the "Company," "we," "us" and "our" refer to 22nd Century Group, Inc., a Nevada corporation, as well as its subsidiaries, 22nd Century Limited, LLC, a Delaware limited liability company, Goodrich Tobacco Company, LLC, a Delaware limited liability company, and Hercules Pharmaceuticals, LLC, a Delaware limited liability company, taken as a whole, and also refer to the operations of 22nd Century Limited, LLC, as discussed below. Our Company Background 22nd Century Group, Inc. was incorporated under the laws of the State of Nevada on September 12, 2005 under the name Touchstone Mining Limited. On January 25, 2011, we entered into a reverse merger transaction with 22nd Century Limited, LLC, which we refer to herein as the Merger. Upon the closing of the Merger, 22nd Century Limited, LLC became our wholly-owned subsidiary. We changed our name to 22nd Century Group, Inc. on November 23, 2010 in anticipation of the Merger with 22nd Century Limited, LLC. After the Merger, we succeeded to the business of 22nd Century Limited, LLC as our sole line of business. 22nd Century Limited, LLC was originally formed as a New York limited liability company on February 20, 1998 as 21st Century Limited, LLC and subsequently merged with a newly-formed Delaware limited liability company, 22nd Century Limited, LLC, on November 29, 1999. Since inception, 22nd Century Limited, LLC has used biotechnology to regulate the nicotine content in tobacco plants. Overview 22nd Century Limited, LLC ("22nd Century Ltd"), our wholly-owned subsidiary, is a plant biotechnology company focused on tobacco harm reduction and smoking cessation products produced from modifying the nicotine content in tobacco plants through genetic engineering and plant breeding. The Company exclusively controls 107 issued patents and exclusively controls an additional 39 patent applications; of these, we own 12 issued patents plus 22 patent applications and we license on an exclusive basis, 95 issued patents and 17 patent applications. Hercules Pharmaceuticals LLC ("Hercules Pharmaceuticals") and Goodrich Tobacco Company, LLC ("Goodrich Tobacco") are wholly-owned subsidiaries of 22nd Century Ltd. Hercules Pharmaceuticals is focused on X-22, a prescription smoking cessation aid currently in development. Goodrich Tobacco is focused on commercial tobacco products and potential modified risk cigarettes. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2012 expresses substantial doubt regarding whether we can continue as a going concern and we cannot guarantee our ability to continue as a going concern. As of March 15, 2013, we had cash on hand of approximately $380,000 due to the capital raises described under "Recent Developments," which should be sufficient to fund operations for approximately 4 months. The Company is primarily involved in the following activities: The international licensing of 22nd Century Ltd s technology, proprietary tobaccos, trademarks and brands; The development of its X-22 prescription smoking cessation aid in development; The development of its modified risk tobacco products; The pursuit of necessary regulatory approvals and clearances at the U.S. Food and Drug Administration (the "FDA") to market X-22 as a prescription smoking cessation aid and BRAND A and BRAND B as Modified Risk Cigarettes in the U.S.; The manufacture, marketing and distribution of RED SUN and MAGIC proprietary cigarettes; and The production of SPECTRUM research cigarettes for the National Institute on Drug Abuse ("NIDA"). Licensing The Company has been in discussions with various parties in the tobacco and pharmaceutical industries for licensing its technology and products since the first quarter of 2012. Management is exploring licensing arrangements on a country-by-country basis in the U.S., Europe and Asia. The Company expects to close at least one licensing agreement for its technology and products before the end of the third quarter of 2013. X-22 The X-22 therapy protocol utilized in the Company s sponsored Phase II-B clinical trial calls for the patient to smoke our very low nicotine ("VLN") cigarettes over a six-week treatment period to facilitate the goal of the patient quitting smoking by the end of the treatment period. We believe this therapy protocol has been successful in independent clinical trials because VLN cigarettes made from our proprietary tobacco satisfy smokers cravings for cigarettes while (i) greatly reducing nicotine exposure and nicotine dependence and (ii) extinguishing the association between the act of smoking and the rapid delivery of nicotine. X-22 involves the same smoking behavior as conventional cigarettes and because patients are simply switching to VLN cigarettes for 6 weeks, X-22 does not expose the smoker to any new drugs or new side effects. Our Investigational New Drug Application for X-22, a kit of VLN cigarettes, was cleared by the FDA in July 2011. Our X-22 Phase II-B clinical trial was completed in the first quarter of 2012 and did not demonstrate a statistically significant difference in quitting between X-22 and the active control, a cigarette containing conventional nicotine levels. However, the median number of X-22 cigarettes smoked during the trial was significantly reduced compared to patients baseline of usual brand of cigarettes. In evaluating the results of this trial, we believe we may have reduced the nicotine content of X-22 by too great a percentage, to a level less than half the nicotine content of VLN cigarettes used in various independent smoking-cessation clinical trials that have demonstrated that use of VLN cigarettes increases quit rates. In contrast to the results of the Company s Phase II-B trial results, independent studies have demonstrated that VLN cigarettes, whether used alone or in conjunction with nicotine replacement therapy (NRT), increase quitting rates. Due to the limited effectiveness and/or serious side effects of existing FDA-approved smoking cessation products, we believe that if additional clinical trials demonstrate increased smoking cessation rates, X-22 can capture a share of this market by replacing sales and market share from existing smoking cessation aids and expanding the smoking cessation market by encouraging more smokers to attempt to quit smoking. We are currently in the process of identifying potential joint venture partners to fund the remaining X-22 clinical trials. We estimate the cost of completing the remaining X-22 clinical trials to be approximately $14 million and the marketing expenses to bring X-22 to market in the U.S. are estimated to be approximately $5 million. There is no guarantee that we will (i) obtain the funds necessary to complete additional clinical trials, (ii) identify potential joint venture partners to fund the remaining X-22 clinical trials, (iii) obtain FDA approval, or (iv) capture significant share of the smoking cessation market upon FDA approval. We continue to believe that our VLN cigarettes are effective as a smoking cessation aid. However, we have suspended sponsoring further X-22 clinical trials pending a complete analysis of results of two independent smoking-cessation trials that were completed in 2012 (ClinicalTrials.gov Identifiers NCT01050569 and NCT01250301), which utilized a different version of our VLN cigarette with a nicotine content similar to those used in previous successful smoking-cessation trials and higher than that used in our own sponsored Phase II-B trial. A portion of the results of these two trials has been disclosed at the annual meeting of the Society for Research on Nicotine and Tobacco ("SRNT") held in Boston on March 13 to 16, 2013. Regarding the NCT01050569 clinical trial, results only in terms of gender differences in abstinence rates were disclosed at the SRNT annual meeting. Dorothy Hatsukami, PhD, was principal investigator of the study. Within the female population at the end of treatment (week 12), the group assigned our VLN cigarette had the highest continuous abstinence rate; the group assigned concurrent use of our VLN cigarette with a 21mg nicotine patch had the next highest continuous abstinence rate followed by the group assigned a 21mg nicotine patch. Within the male population at the end of treatment (week 12), the group assigned a 21mg nicotine patch had the highest continuous abstinence rate; the group assigned concurrent use of our VLN cigarette with a 21mg nicotine patch had the next highest continuous abstinence rate followed by the group assigned our VLN cigarette. Regarding the NCT01250301 clinical trial, certain results were disclosed in a presentation at the SRNT annual meeting given by Hayden McRobbie, Ph.D. of Queen Mary University of London, Wolfson Institute of Preventative Medicine, who was the principal investigator of the study. Pfizer Inc. was also a collaborator of the study. This clinical trial evaluated whether the use of our VLN cigarette in combination with Chantix or in combination with nicotine replacement therapy ("NRT") increases abstinence rates over the use of Chantix or the use of NRT. The study included one hundred smokers who were prescribed varenicline (trademarked Chantix, or Champix outside the U.S.) and one hundred smokers who were prescribed NRT. Half the smokers of each of these groups were randomly selected to also use our VLN cigarettes for the first 2 weeks of treatment. All smokers received 9 weekly behavioral support sessions throughout the 12-week study period. The group that used our VLN cigarettes had a 70% quit rate one week after stopping VLN cigarette use compared to a 53% quit rate of the group not using VLN cigarettes after week 1 (p=0.02). The group that used our VLN cigarettes had a 64% four-week continuous abstinence rate during weeks 3 to 6 compared to a 50% four-week continuous abstinence rate during weeks 1 to 4 (p=0.06). Quit rates at 12 weeks post treatment were not reported in the presentation. The full set of results of these 2 independent clinical trials are expected to be published in peer reviewed journals and will be compared to results of other independent clinical trials of our VLN cigarettes and results of our Phase II-B trial to determine which variables optimize cessation. One preliminary hypothesis, in conjunction with results of various other studies of our VLN cigarettes, is that having two types of prescription VLN cigarettes available may be advantageous for increased smoking cessation in the general population; one having a higher nicotine content than the other. Upon identifying a suitable joint venture partner to fund further X-22 clinical trials, we will then request a meeting with the U.S. Food and Drug Administration ("FDA"), and thereafter we may resume our own sponsored X-22 clinical trials. Potential Modified Risk Cigarettes and the Tobacco Control Act The 2009 Family Smoking Prevention and Tobacco Control Act ("Tobacco Control Act") granted the FDA authority over the regulation of all tobacco products. While it prohibits the FDA from banning cigarettes outright, it allows the FDA to require the reduction of nicotine or any other compound in tobacco and cigarette smoke. The Tobacco Control Act also banned all sales in the U.S. of cigarettes with characterizing flavors (other than menthol). As of June 2010, all cigarette companies were required to cease the use of the terms "low tar," "light" and "ultra light" in describing cigarettes sold in the U.S. Besides numerous other regulations, including certain marketing restrictions, for the first time in history, a U.S. regulatory agency will scientifically evaluate cigarettes that may pose lower health risks as compared to conventional cigarettes. The Tobacco Control Act establishes procedures for the FDA to regulate the labeling and marketing of modified risk tobacco products, which includes cigarettes that (i) reduce exposure to tobacco toxins and (ii) are reasonably likely to pose lower health risks as compared to conventional cigarettes ("Modified Risk Cigarettes"). The Tobacco Control Act requires the FDA to issue specific regulations or guidance regarding applications that must be submitted to the FDA for the authorization to label and market Modified Risk Cigarettes. On March 30, 2012, the FDA issued Modified Risk Tobacco Product Applications Draft Guidance. We believe that two types of our cigarettes in development which we refer to as BRAND A and BRAND B, may qualify as Modified Risk Cigarettes. Compared to commercial cigarettes, the tobacco in BRAND A has approximately 95% less nicotine than tobacco in cigarettes previously marketed as "light" cigarettes, and BRAND B s smoke contains an extraordinary low amount of "tar" per milligram of nicotine. Goodrich Tobacco intends to seek FDA authorization to market BRAND A and BRAND B as Modified Risk Cigarettes and expect to file applications with the FDA in 2013, the exact timing will depend on the timing of obtaining additional capital. After filing our modified risk applications with the FDA, we will need significant additional capital to complete the FDA authorization process for our Modified Risk Cigarettes. The exact amount of capital is currently unknown since it is uncertain how many exposure studies the FDA will require for BRAND A and BRAND B. However, we estimate that the cost of completing the FDA authorization process for each of our potential Modified Risk Cigarettes to be at least $2 million. We believe that BRAND A and BRAND B will achieve market share in the global cigarette market among smokers who will not quit but are interested in reducing the harmful effects of smoking. There is no guarantee that we will (i) obtain additional capital to complete the FDA authorization process for our potential Modified Risk Cigarettes, (ii) obtain FDA authorization to market BRAND A or BRAND B as Modified Risk Cigarettes, or (iii) achieve significant market with FDA authorization to market our products as Modified Risk Cigarettes. Within our two product categories, the Tobacco Control Act offers us the following specific advantages: Smoking Cessation Aids FDA approval must be obtained, as has been the case for decades, before a product can be marketed for quitting smoking. The Tobacco Control Act provides that products for quitting smoking or smoking cessation, such as X-22, be considered for "Fast Track" designation by the FDA. The "Fast Track" programs of the FDA are intended to facilitate development and expedite review of drugs to treat serious and life-threatening conditions so that an approved product can reach the market expeditiously. Although X-22 has failed previously to qualify for "Fast Track," we believe that upon completion of a company-sponsored clinical trial demonstrating efficacy, X-22 will qualify for "Fast Track" designation by the FDA. However, there is no guarantee that the FDA will grant "Fast Track" designation to X-22. See "Business – Government Regulation – Fast Track Development." Modified Risk Cigarettes We believe this new regulatory environment represents a paradigm shift for the tobacco industry. Besides the fact that the Tobacco Control Act establishes procedures for the FDA to regulate the labeling and marketing of modified risk tobacco products, the Tobacco Control Act allows the FDA to mandate the use of reduced-risk technologies across all conventional tobacco products or cigarettes. We believe the Tobacco Control Act may create opportunities for us to license our proprietary technology and/or tobaccos to larger competitors. Tar, Nicotine, and Smoking Behavior The dependence of many smokers on tobacco is largely due to the properties of nicotine, but the adverse effects of smoking on health are mainly due to other components present in tobacco smoke, including "tar" and carbon monoxide. "Tar" is the common name for the (resinous) total particulate matter minus nicotine and water produced by the burning of tobacco (or other plant material) during the act of smoking. "Tar" and nicotine are commonly measured in milligrams per cigarette trapped on a Cambridge filter pad under standardized conditions using smoking machines. These results are referred to as "yields" or, more specifically, "tar" yield and nicotine yield. Individual smokers generally seek a certain amount of nicotine per cigarette and can easily adjust how intensely each cigarette is smoked to obtain a satisfactory amount of nicotine. Smoking of low yield ("light" or "ultra light") cigarettes compared to high yield ("full flavor") cigarettes often results in taking more puffs per cigarette, larger puffs and/or smoking more cigarettes per day to obtain a satisfactory amount of nicotine, a phenomenon known as "compensation" or "compensatory smoking." A report by the National Cancer Institute in 2001 stated that due to compensatory smoking, low yield cigarettes are not safer than full flavor cigarettes, which is the reason that the Tobacco Control Act has banned the use of the terms "low tar," "light" and "ultra light" in the U.S. market. Studies have shown, however, that smokers generally do not compensate when smoking cigarettes made with our VLN tobacco, and that smoking VLN cigarettes, such as BRAND A, actually assist smokers to smoke fewer cigarettes per day and reduce their exposure to "tar" and nicotine. Other studies have demonstrated that compensatory smoking (e.g., more and/or larger puffs per cigarette) of low-tar research cigarettes, similar to BRAND B (though BRAND B was not used in such studies), is greatly curtailed resulting in smokers inhaling less "tar" and carbon monoxide. Additional studies will be necessary to establish whether BRAND B cigarettes achieve similar results. RED SUN and MAGIC Cigarettes Goodrich Tobacco has thus far had its cigarette brands contract manufactured by a non-participating manufacturer to the "Master Settlement Agreement" or "MSA," a settlement among 46 states and the tobacco industry administered by the National Association of Attorneys General ("NAAG"). Our subsidiary, Goodrich Tobacco, introduced in a limited capacity two super-premium priced cigarette brands, RED SUN and MAGIC, into the U.S. market in the first quarter 2011. There have been de minimis sales of these brands in 2011 and 2012 since we have intentionally have not expanded marketing and distribution of these brands to facilitate Goodrich Tobacco becoming a participating manufacturer of the MSA. The more RED SUN and MAGIC sold while these brands are produced by a non-participating manufacturer, the greater the settlement costs Goodrich Tobacco likely has to pay to become a participating manufacturer of the MSA. On January 23, 2013, Goodrich Tobacco applied to the Alcohol and Tobacco Tax Trade Bureau ("TTB") for a federal permit to manufacture its own tobacco products. Being a federally licensed tobacco product manufacturer is a primary requirement of becoming a participating manufacturer of the MSA. On February 26, 2013, Goodrich Tobacco applied to the NAAG to become a participating manufacturer to the MSA. Both of these measures, if approved by the TTB and NAAG, will greatly facilitate the sales and distribution potential of RED SUN and MAGIC. Goodrich Tobacco expects its cigarette factory startup costs to be approximately $250,000 and plans to lease a portion of the machinery required. The costs associated with the MSA settlement are expected to be less than $40,000. The expected marketing costs for RED SUN and MAGIC in 2013 are $100,000. SPECTRUM Government Research Cigarettes As a subcontractor to RTI International ("RTI") in RTI s contract with The National Institute on Drug Abuse for the Research Cigarette Option, we supply modified nicotine (from very low to high) cigarettes to NIDA. These research cigarettes are distributed under the mark SPECTRUM. For more information about our business, see "Business" and "Management s Discussion and Analysis of Financial Condition" in this prospectus. Current Financial Condition We have operated at a loss since 2006 when we increased our research and development expenditures. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2012 expresses substantial doubt regarding whether we can continue as a going concern and we cannot guarantee our ability to continue as a going concern. We had net losses of $6.7 million, $1.3 million and $1.4 million, respectively, in the years ended December 31, 2012, 2011 and 2010. We realized revenue of $18,775 in the year ended December 31, 2012 mainly from the sale of research cigarettes. In the year ended December 31, 2011, we realized revenue of $788,601 mainly from the sale of research cigarettes and in 2010, we realized revenue of $49,784. As of March 15, 2013, we had cash on hand of approximately $380,000 due to the capital raises described under "Recent Developments," which should be sufficient to fund operations for approximately 4 months. Subsequent to December 31, 2012, the Company realized net proceeds of approximately $2.125 million through the sale of preferred shares. Convertible Notes with a carrying value at December 31, 2012 of approximately $1.41 million were converted into common stock and warrants. While these steps significantly improved the Company s financial position, we will need additional capital or one or more licensing arrangements for our technology and products in order to meet cash requirements to fund operations and meet our obligations during 2013. Excluding contract growing of our proprietary tobacco with farmers and extraordinary expenses such as clinical trials and factory setup costs, our monthly cash expenditures are approximately $100,000. In the event the Company does not enter into an out-licensing agreement with a third party in 2013, approximately $1.6 million of additional capital is required through 2013, which includes paying approximately $1 million of obligations that will become due in 2013. The Company expects its cigarette factory start up costs to require an additional $250,000 of capital. It plans to lease a portion of the machinery required. The Company s R&D expenditures in 2013 are expected to be approximately $200,000. Upon the required funding, we expect to carry out exposure studies for our Modified Risk cigarette candidates and will carry out additional clinical trials for X-22 if Hercules Pharmaceuticals, our subsidiary, identifies a joint venture partner willing to fund these trials. The ability to complete additional equity or debt financings on acceptable terms will depend on a number of factors, including the general performance of the capital markets, the Company s progress in the manufacture, distribution and sale of its products, licensing of its technology, products and tobacco, and results of independent smoking cessation clinical trials utilizing the Company s products. In addition, our ability to complete additional debt and equity financings is limited by covenants related to our Series A-1 Preferred Stock. However, we can issue securities pursuant to strategic transactions approved by a majority of our disinterested directors, provided that any such issuance shall only be to an entity which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with our business which provides us additional benefits in addition to the investment of funds. See "Risk Factors - Our ability to obtain future debt financing is limited while shares of our Series A-1 Preferred Stock are outstanding" on page 12 of this prospectus. Failure to license the Company s technology, products and tobacco or to raise sufficient capital would significantly increase the risk that we would be unable to continue operations. To the extent that we raise additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to our technology, tobacco or products or grant licenses on terms that are not favorable to us. There can be no assurance that the Company will be able to raise sufficient financing or obtain a significant licensing contract. Corporate Information Our principal executive offices are located at 9530 Main Street, Clarence, New York 14031. The telephone number at our principal executive offices is (716) 270-1523. Our website address is www.xxiicentury.com. Information contained on our website is not deemed part of this prospectus. Recent Developments Private Placement of Preferred Stock and Warrants On January 11, 2013, we entered into and closed the transactions described in a Securities Purchase Agreement with certain accredited investors identified therein (collectively, the "Purchasers"), whereby we sold 2,500 shares of newly created Series A-1 10% Convertible Preferred Stock (the "Series A-1 Preferred Stock") and Warrants (as defined below) for an aggregate purchase price of $2,500,000. We also entered into a Registration Rights Agreement whereby we agreed to file a registration statement to register the resale of the shares of our common stock that are potentially issuable under each of the securities described below. The shares of Series A-1 Preferred Stock are initially convertible into a total of 4,166,666 shares of the Company s common stock at a conversion price of $0.60 per share (the "Conversion Price"), subject to future adjustments. The Series A-1 Preferred Stock will pay a 10.0% annual cash dividend, which may be payable in shares of our common stock in certain circumstances, and will have a liquidation preference equal to the stated value of the Series A-1 Preferred Stock of $1,000 per share plus any accrued and unpaid dividends thereon. The Series A-1 Preferred Stock has no voting rights. The Conversion Price of the Series A-1 Preferred Stock is subject to adjustment as follows: (i)on the effective date of this registration statement, the Conversion Price will be reduced to the lesser of (1) the then Conversion Price, as adjusted and taking into consideration any prior resets, (2) the greater of $0.35 (subject to adjustment for reverse and forward stock splits and the like) and 70% of the average of the five (5) trading day volume weighted average prices, or VWAPs, immediately prior to each such effective date or (3) $0.60 (subject to adjustment for forward and reverse stock splits and the like); (ii)if on the 180th day immediately following the closing date of January 11, 2013 (the "Closing Date"), 70% of the average of the five (5) trading day VWAPs immediately prior to such date is less than the then Conversion Price, then on such 180th day the Conversion Price shall be reduced, and only reduced, to the lesser of (1) the then Conversion Price, as adjusted and taking into consideration any prior resets, (2) the greater of $0.15 (subject to adjustment for reverse and forward stock splits and the like) and 70% of the average of the five (5) trading day VWAPs immediately prior to each such 180th day immediately following the Closing Date or (3) $0.35 (subject to adjustment for forward and reverse stock splits and the like); and (iii)if all of the shares required to be registered are not registered pursuant to an effective registration statement within the 120th day anniversary of the Closing Date, then on the 180th day and 270th day following the Closing Date, the Conversion Price shall be reduced, and only reduced, to the lesser of (1) the then Conversion Price, as adjusted and taking into consideration any prior resets, (2) the greater of $0.15 (subject to adjustment for reverse and forward stock splits and the like) and 70% of the average of the five (5) trading day VWAPs immediately prior to each such date or (3) $0.35 (subject to adjustment for forward and reverse stock splits and the like). The foregoing description of the Series A-1 Preferred Stock is only a summary and is not complete. For additional information about the terms of the Series A-1 Preferred Stock, including the anti-dilution features, liquidated damages provisions for certain events and negative covenants, see the section entitled "Description of Securities – Preferred Stock" in this prospectus. We also issued to the Purchasers a Series A warrant (the "Series A Warrant"), a Series B warrant (the "Series B Warrant"), and a Series C warrant (the "Series C Warrant") (with the Series A Warrant, Series B Warrant and Series C Warrant being collectively referred to herein as the "Warrants"). The Series A Warrant allows the Purchasers the right to acquire, initially before any adjustments to the conversion price, up to an additional 4,166,666 shares of the Company s common stock at an exercise price of approximately $0.72 per share over a period of five (5) years. The Series A Warrant also allows for such warrant to be exercised on a cashless basis. The Series B Warrant allows the Purchasers a one-year period to exercise an overallotment option as contained in the Series B Warrant to purchase, initially before any adjustments to the conversion price, up to an additional aggregate of 2,083,334 shares of the Company s common stock at a price of $0.60 per share. The Series B Warrant may not be exercised on a cashless basis except only in certain limited circumstances. In the event the Purchasers exercise, in whole or in part the overallotment option as contained in the Series B warrant, then the Purchasers shall have the right to exercise on a pro rata basis the portion of the Series C Warrant issued to the Purchasers to acquire, initially before any adjustments to the conversion price, up to an additional aggregate of 2,083,334 shares of the Company s common stock at an exercise price of approximately $0.72 per share over a period of five (5) years. The Series C Warrant allows for such warrant to be exercised on a cashless basis. The foregoing description of the Warrants is only a summary and is not complete. For additional information about the terms of the Warrants, including the anti-dilution features, see the section entitled "Description of Securities – Warrants and Convertible Notes" in this prospectus. The Series A-1 Preferred Stock and the Warrants contain exercise and conversion limitations providing that a holder thereof may not convert or exercise (as the case may be) to the extent that, if after giving effect to such conversion or exercise (as the case may be), the holder or any of its affiliates would beneficially own in excess of 9.99% of the outstanding shares of common stock immediately after giving effect to such conversion or exercise (as the case may be). The Series A-1 Preferred Stock and the Warrants were offered and sold pursuant to an exemption from the registration requirements under Sections 4(2), Section 4(6) and Regulation S of the Securities Act and Rule 506 of Regulation D promulgated thereunder. We paid Chardan Capital Markets LLC a commission equal to (i) ten percent (10%) of the cash received by us and (ii) 416,666 shares of common stock. In the event the Purchasers exercise for cash any of the Warrants, then we will also pay an additional cash commission to Chardan Capital Markets LLC equal to eight percent (8%) (with no additional equity) of any such additional cash amounts received by us. After deducting fees and expenses, the aggregate net proceeds from the sale of the Series A-1 Preferred Shares and the Warrants were approximately $2.125 million. We intend to use the net proceeds for the payment of certain financial obligations and for working capital and other general corporate purposes. Modification and Conversion of Convertible Notes Due December 14, 2012 On December 14, 2011, we sold approximately $1.9 million of convertible promissory notes for an aggregate purchase price of approximately $1.7 million in a private placement (the "Convertible Notes"). The notes were issued with an original issue discount of approximately 15% and the original maturity date of the notes was December 14, 2012 (which was extended as set forth below). Upon conversion of all or a portion of the Convertible Notes into common stock, the holder would receive at that time a warrant to purchase at an exercise price of $1.50 per share; such number of shares of common stock from such warrant equal to 120% of such number of shares of common stock issuable upon conversion of the note. All of the Convertible Notes issued on December 14, 2011 have been either converted or paid off in full subsequent to December 31, 2012. At December 31, 2012 notes with a total face and carrying value of $1,805,500 remained outstanding; of this amount $1,523,750 were extended, by agreement with the note holders, to April 14, 2013 at 15% interest per annum. The notes were initially convertible into shares of our common stock at any time prior to maturity at a per share conversion price equal to $0.75. From January 1, 2013 to February 6, 2013, $1,408,750 of the notes (together with accrued interest), with an adjusted conversion price of $0.7004 were converted into 2,035,720 shares of common stock and five-year warrants to purchase 2,662,769 shares of common stock at $1.50 per share; the Company discharged the remaining note principal of $396,750 by payment in cash of $339,250 and issuing a new note of $57,500 maturing in August 2013. A $247,250 note held by an executive officer and another note of $30,000 were discharged through payments in cash. Subsequent to this repayment, the Company issued a promissory note to the executive officer in the amount of $150,000, with 15% interest per annum and maturing on July 1, 2013. A third note of $115,000 plus interest was discharged through a payment of $58,340 in conjunction with a new note being issued for the same amount. In connection with the issuance of preferred shares in January 2013, the note holders entered into a lock-up agreement with the Company which limits their ability to sell any of the shares received as a result of the conversion of the notes and received additional warrants (five year term at $1.50 exercise price) to purchase 239,900 shares of common stock. Between December 14, 2012 and January 2, 2013, we entered into agreements with holders of $1,805,500 of the notes that remained outstanding. Holders of $1,408,750 of the notes agreed to extend the maturity date of the notes to April 14, 2013. Holders of $115,000 of the notes elected to convert into shares of the common stock pursuant to the terms of the notes. Holders of $247,250 of the notes elected to enter into a forbearance agreement and were subsequently paid in full. Holders of $34,500 of the notes agreed to be paid over time. On January 24, 2013, we sent out notices to the holders of the notes regarding our intent to repay the notes at the expiration of a 15-day period during which time the holders may convert to common stock and warrants to purchase common stock. From January 1, 2013 through February 6, 2013, the remaining notes were converted into common stock and warrants. Certain Arrangements On March 30, 2011, the Company issued a note to a vendor in the amount of $350,000 as satisfaction of past due invoices previously recorded by the Company in accounts payable. The note bears interest at an annual rate of 4%. Principal and accrued interest, which were due on July 1, 2012 have not been paid as of December 31, 2012. The outstanding principal on this note was $350,000 as of December 31, 2012 and 2011. In January 2013 the Company repaid $175,000 of note principal and all accrued interest; the balance of $175,000 was replaced by a new note which is unsecured, bears interest at 5% and matures July 1, 2014 or sooner if the Company receives license revenue or financing of at least $1,500,000 prior to maturity. As of March 15, 2013, the Company was in full compliance with the NCSU license agreement. Since December 31, 2012 the Company paid NCSU $400,000 and issued a note dated February 1, 2013 for $474,893; the note is unsecured, bears interest at 5% and matures the earlier of October 1, 2013 or the closing of an in-licensing agreement with up front proceeds of at least $1.5 million. NCSU also agreed to not to invoke any rights to terminate the Company s license agreement for nonpayment or nonperformance until October 1, 2013. Appointment of New Chief Financial Officer Effective April 1, 2013 On March 19, 2013, we appointed Mr. John T. Brodfuehrer to be our Chief Financial Officer and Treasurer beginning April 1, 2013. Mr. Brodfuehrer was not appointed to be a Director of the Company. In connection with Mr. Brodfuehrer s appointment, Mr. Henry Sicignano III will step down from his role as interim Chief Financial Officer on April 1, 2013; Mr. Sicignano will continue to serve as President, Secretary and Director of the Company. Mr. Brodfuehrer, age 55, served as Chief Financial Officer of Latina Boulevard Foods, LLC, an entity formed as the result of a merger of two long-time Western New York wholesale food distributors, from March 2011 until March 2013. From May 2010 to February 2011, Mr. Brodfuehrer was Vice-President of Retail Accounting for United Refining Company, an independent refiner and marketer of petroleum products. Prior to his time at United Refining Company, Mr. Brodfuehrer served in multiple roles over a twenty-four year span with NOCO Incorporated (formerly NOCO Energy Corp.) a diversified distributor of energy products and related services. Mr. Brodfuehrer served as NOCO Incorporated s Chief Financial Officer, Vice-President and as a member of the Board of Directors from 2000 to June 2009 and as a financial consultant to NOCO Incorporated from July 2009 to April 2010. Mr. Brodfuehrer earned a Bachelor of Science in Business Administration, summa cum laude, from the State University of New York at Buffalo in 1979 and became a New York State Certified Public Accountant in 1981. Mr. Brodfuehrer executed an employment agreement with us for an initial term of two years. Pursuant to the employment agreement, Mr. Brodfuehrer will earn an initial base salary of one hundred ten thousand dollars and may become eligible for certain bonuses and equity awards. Further, if Mr. Brodfuehrer s employment is terminated prior to the end of the initial two year term by the Company without "Cause" or by Mr. Brodfuehrer for Good Reason (as such terms are defined in the employment agreement), Mr. Brodfuehrer will be entitled to a severance benefit in the form of a continuation of his then-base salary until the later of (i) six months from the termination date or (ii) the expiration of the initial two year term. Mr. Brodfuehrer was also awarded one hundred thousand (100,000) restricted shares of common stock, which are subject to vesting conditions. The Offering Common stock currently outstanding 38,259,365 shares (1) (2) Common stock offered by us None. Common stock offered by the selling stockholders Up to 6,250,000 shares issuable (i) upon conversion of our Series A-1 Preferred Stock and (ii) upon the exercise of the Series B Warrants. Use of Proceeds We will not receive any proceeds from the sale of common stock by the selling stockholders, but we will receive funds from the exercise of the Series B Warrants, if exercised. Risk Factors See "Risk Factors" and other information included in this prospectus for a discussion of factors that you should consider before deciding to invest in shares of our common stock. OTC Bulletin Board Symbol XXII.OB (1) As of March 15, 2013. (2) Unless otherwise indicated, the number of shares in this prospectus does not give effect to: up to 4,166,666 shares of common stock that could be issued as a result of the conversion of the shares of Series A-1 Preferred Stock, which is subject to adjustment as described under "Description of Securities – Preferred Stock"; up to 950,000 shares of common stock reserved for future issuance under the Equity Incentive Plan; up to 680,000 shares of common stock issuable upon exercise of outstanding stock options; up to 371,000 shares of common stock currently issuable upon the conversion of convertible notes (subject to adjustment for anti-dilution adjustments); up to 22,343,082 shares of common stock currently issuable upon the exercise of outstanding warrants (including the Series A Warrants and Series B Warrants) (subject to adjustment for anti-dilution adjustments); and up to 2,454,334 shares of common stock issuable upon exercise of warrants issuable upon conversion or exercise of other instruments (including the Series C Warrants) (subject to adjustment for anti-dilution adjustments). Cautionary Note Regarding Forward-Looking Statements This prospectus contains forward-looking statements. This prospectus includes statements regarding our plans, goals, strategies, intentions, beliefs or current expectations. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished. These forward looking statements can be identified by the use of terms and phrases such as "believe," "plan," "intend," "anticipate," "target," "estimate," and "expect." Items contemplating or making assumptions about, actual or potential future sales, market size, collaborations, and trends or operating results also constitute forward-looking statements. These forward-looking statements are only predictions, are uncertain and involve substantial known and unknown risks, uncertainties and other factors which may cause our (or our industry s) actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. The "Risk Factors" section of this prospectus sets forth detailed risks, uncertainties and cautionary statements regarding our business and these forward-looking statements. Since our common stock is considered a "penny stock," we are ineligible to rely on the safe harbor for forward-looking statements provided in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We cannot guarantee future results, levels of activity or performance. You should not place undue reliance on these forward-looking statements, which speak only as of the date that they were made. These cautionary statements should be considered with any written or oral forward-looking statements that we may issue in the future. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to reflect actual results, later events or circumstances or to reflect the occurrence of unanticipated events. You should carefully review and consider the various disclosures made by us in our reports filed with the Securities and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected. Risk Factors An investment in shares of our common stock is highly speculative and involves a high degree of risk. We face a variety of risks that may affect our operations or financial results and many of those risks are driven by factors that we cannot control or predict. The following discussion addresses all risks that management believes are material that may affect our operations or financial results. Only those investors who can bear the risk of loss of their entire investment should participate in this offering. Prospective investors should carefully consider the following risk factors in evaluating an investment in our common stock. Risks Related to Our Business and Operations We may not be able to continue as a going concern unless we obtain additional capital and future sales of equity securities will cause stockholders to experience substantial dilution. Recurring losses from operations, our negative working capital of approximately $3.3 million and $1.9 million as of December 31, 2012 and 2011, respectively, shareholders deficit of $6.1 million and $1.2 million as of December 31, 2012 and 2011, respectively, and the uncertainty of obtaining additional capital on a timely basis, raise doubt about our ability to continue as a going concern. It is highly probable that any sales of equity securities will cause our stockholders to experience substantial dilution. It is also possible that such equity securities will have rights, preferences or privileges senior to those of existing stockholders. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2012 expresses substantial doubt regarding whether we can continue as a going concern. We cannot guarantee our ability to continue as a going concern. We have had a history of losses, and we may be unable to achieve or sustain profitability. We experienced net losses, including adjustment of our warrant liability, of approximately $6.7 million, $1.3 million and $1.4 million during the years ended December 31, 2012, 2011 and 2010, respectively. We expect to continue to incur net losses and negative operating cash flows in the foreseeable future and cannot be certain that we will ever achieve profitability. Since 2007, we have received only limited licensing revenue from a former licensee and our only significant revenue has been from research cigarettes for which the market is limited. We will need to spend significant capital to fulfill planned operating goals and conduct clinical studies, achieve regulatory approvals and, subject to such approvals, successfully produce products for commercialization. Excluding contract growing of our proprietary tobacco with farmers and extraordinary expenses such as clinical trials and factory setup costs, our monthly cash expenditures are approximately $100,000. In the event the Company does not enter into an out-licensing agreement with a third party in 2013, approximately $1.6 million of additional cash is required through 2013, which includes paying approximately $1 million of obligations that will become due in 2013. There can be no assurance that the Company will be able to raise sufficient financing or obtain a licensing agreement. We have a history of negative cash flow, and our ability to generate positive cash flow is uncertain. We had negative cash flow before financing activities of approximately $1,927,000, $4,057,000 and $1,018,000 during the years ended December 31, 2012, 2011 and 2010, respectively. We anticipate that we will continue to have negative cash flow for the foreseeable future even though we have suspended clinical trials for X-22 because we have significant liabilities that are due or that will become due in 2013 and we will continue to incur expenses for sales and marketing, and general and administrative expenses. Our business will also require significant amounts of working capital to support our growth. Therefore, we will likely need to raise additional investment capital to achieve growth, and we may not achieve sufficient revenue growth to generate positive future cash flow. An inability to generate positive cash flow for the foreseeable future or raise additional capital on reasonable terms may decrease our long-term viability. Our ability to obtain future debt financing is limited while shares of our Series A-1 Preferred Stock are outstanding. Our Certificate of Designations regarding our Series A-1 Preferred Stock contains restrictive covenants that limit our ability to, among other things, incur or assume additional debt or provide guarantees in respect of obligations of other persons (in each case, so long as 1,000 or more shares of our Series A-1 Preferred Stock are outstanding, and other than with respect to lease obligations and purchase money indebtedness in an amount up to $200,000 in the aggregate), or create, assume, or suffer to exist any liens (other than liens for taxes not yet due, liens contested in good faith, and liens imposed in the ordinary course of business that do not materially impair the operation of the business) without, in each instance, the prior written consent of at least 67% in stated value of the then-outstanding shares of Series A-1 Preferred Stock. A breach of these covenants would trigger the ability of the holders of the Series A-1 Preferred Stock to redeem their shares of Series A-1 Preferred Stock for cash or shares of our common stock or elect to increase the dividend payments to be made on their shares of Series A-1 Preferred Stock to 18% per annum. However, our Certificate of Designations regarding our Series A-1 Preferred Stock allows us to issue securities without restrictions pursuant to strategic transactions approved by a majority of our disinterested directors, provided that any such issuance shall only be to an entity which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with our business which provides us additional benefits in addition to the investment of funds. Our limited operating history makes it difficult to evaluate our current business and future prospects. We have been in existence since 1998, but our activities have been limited primarily to licensing and funding research and development activities. Our limited operating history may make it difficult to evaluate our current business and our future prospects. We have encountered and will continue to encounter risks and difficulties frequently experienced by growing companies in rapidly changing industries, including increasing expenses as we continue to grow our business. If we do not manage these risks successfully, our business will be harmed. We have no experience in managing growth. If we fail to manage our growth effectively, we may be unable to execute our business plan or address competitive challenges adequately. We currently have six employees. Any growth in our business will place a significant strain on our managerial, administrative, operational, financial, information technology and other resources. We intend to further expand our overall business, customer base, employees and operations, which will require substantial management effort and significant additional investment in our infrastructure. We will be required to continue to improve our operational, financial and management controls and our reporting procedures and we may not be able to do so effectively. As such, we may be unable to manage our growth effectively. Our working capital requirements involve estimates based on demand expectations and may increase beyond those currently anticipated, which could harm our operating results and financial condition. We have no experience in selling smoking cessation products or Modified Risk Cigarettes on a commercial basis. As a result, we intend to base our funding and inventory decisions on estimates of future demand. If demand for our products does not increase as quickly as we have estimated, our inventory and expenses could rise, and our business and operating results could suffer. Alternatively, if we experience sales in excess of our estimates, our working capital needs may be higher than those currently anticipated. Our ability to meet any demand for our products may depend on our ability to arrange for additional financing for any ongoing working capital shortages, since it is likely that cash flow from sales will lag behind our investment requirements. We have suspended further clinical trials for FDA approval of our X-22 smoking cessation aid and we will need additional capital before we can complete the FDA authorization process for our Modified Risk Cigarettes. We have suspended further clinical trials for FDA approval of our X-22 smoking cessation aid until we identify a suitable joint venture partner willing to fund further X-22 clinical trials. At that time we may resume our own sponsored X-22 clinical trials. There is no guarantee that we will identify a joint venture partner willing to fund further X-22 clinical trials. We estimate the cost of completing a Phase II trial will be approximately $2 million and the cost of completing two Phase III trials to be approximately $12 million. We will require additional capital in the future before we can complete the FDA authorization process for our Modified Risk Cigarettes. We estimate that the cost of completing the FDA authorization process for each of our two potential Modified Risk Cigarettes to be at least $2 million. If we raise additional funds through the issuance of equity securities for the FDA authorization process for our Modified Risk Cigarettes, our stockholders may experience substantial dilution, or the equity securities may have rights, preferences or privileges senior to those of existing stockholders. If we raise additional funds through debt financings, these financings may involve significant cash payment obligations and covenants that restrict our ability to operate our business and make distributions to our stockholders. However, our ability to raise funds through debt financing is limited while any shares of our Series A-1 Preferred Stock is outstanding. We also could elect to seek funds through arrangements with collaborators or licensees. To the extent that we raise additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to our technologies or our potential products or grant licenses on terms that are not favorable to us. If we choose to resume our own clinical trials for FDA approval of our X-22 smoking cessation product and we cannot raise additional capital on acceptable terms, we may not be able to, among other things: complete clinical trials of our X-22 smoking cessation aid; undertake the steps necessary to seek FDA authorization of our Modified Risk Cigarettes; develop or enhance our potential products or introduce new products; expand our development, sales and marketing and general and administrative activities; attract tobacco growers, customers or manufacturing and distribution partners; acquire complementary technologies, products or businesses; expand our operations in the United States or internationally; hire, train and retain employees; or respond to competitive pressures or unanticipated working capital requirements. We currently are not in compliance with annual "clean-up" provisions under a revolving line of credit. Included in current liabilities at December 31, 2012 is a demand loan under a revolving credit agreement with a balance outstanding of $174,925, which is payable to a commercial bank and guaranteed by one of our shareholders. This exact same principal amount has been outstanding for over four years on a continuous basis, notwithstanding the fact that we have not complied with annual "clean-up" provisions which require that we repay all amounts outstanding for a period of 30 consecutive days each year. There are no additional amounts available to us under this credit agreement. We have paid interest only since 2008 (currently at the bank s annual prime rate plus 0.75% or 4%) on a monthly basis according to the bank s monthly payment statements. Our plans contemplate that this balance remains outstanding while we continue to pay interest only on a monthly basis. We may incur disruptions in our operations in the event the bank were to demand repayment in full, close the revolving credit agreement, and not allow us sufficient time to locate additional capital. We will depend on third parties to manufacture our products. We currently do not manufacture any of our products and depend on contract manufacturers to produce our products according to our specifications, in sufficient quantities, on time, in compliance with appropriate regulatory standards and at competitive prices. We currently do not have an arrangement with any contract manufacturer to produce our final version of X-22 smoking cessation aid once it is approved by the FDA. Manufacturers supplying our potential products must comply with FDA regulations which require, among other things, compliance with the FDA s evolving regulations on Current Good Manufacturing Practices ("cGMP(s)"), which are enforced by the FDA through its facilities inspection program. The manufacture of products at any facility will be subject to strict quality control, testing and record keeping requirements, and continuing obligations regarding the submission of safety reports and other post-market information. We cannot guarantee that our current contract manufacturers will pass FDA and/or similar inspections in foreign countries to produce the final version of our X-22 smoking cessation aid, or that future changes to cGMP manufacturing standards will not also affect the manufactures of our other products. Therefore, we may have to build our own manufacturing facility which would require additional capital. We will mainly depend on third parties to market, sell and distribute our products, and we currently have no commercial arrangements for the marketing, sale or distribution of our X-22 smoking cessation aid. We expect to depend on third parties to a great extent to market, sell and distribute our products and we currently have no arrangements with third parties in place to provide such services for our X-22 smoking cessation aid. We cannot be sure that we will be able to enter into such arrangements on acceptable terms, or at all. If we are unable to enter into marketing, sales and distribution arrangements with third parties for our X-22 smoking cessation aid, we would need to incur significant sales, marketing and distribution expenses in connection with the commercialization of X-22 and any future potential products. We do not currently have a dedicated sales force, and we have no experience in the sales, marketing and distribution of pharmaceutical products. Developing a sales force is expensive and time-consuming, and we may not be able to develop this capacity. If we are unable to establish adequate sales, marketing and distribution capabilities, independently or with others, we may not be able to generate significant revenue and may not become profitable. If our X-22 smoking cessation aid does not gain market acceptance among physicians, patients, third-party payers and the medical community, we may be unable to generate significant revenue. Our X-22 smoking cessation aid may not achieve market acceptance among physicians, patients, third-party payers and others in the medical community. If we receive FDA approval for the marketing of X-22 as a smoking cessation aid in the U.S., the degree of market acceptance could depend upon a number of factors, including: limitations on the indications for use for which X-22 may be marketed; the establishment and demonstration in the medical community of the clinical efficacy and safety of our potential products and their potential advantages over existing products; the prevalence and severity of any side effects; the strength of marketing and distribution support; and sufficient third-party coverage or reimbursement. The market may not accept our X-22 smoking cessation aid, based on any number of the above factors. Even if the FDA approves the marketing of X-22 as a smoking cessation aid, there are other FDA-approved products available and there will also be future competitive products which directly compete with X-22. The market may prefer such existing or future competitive products for any number of reasons, including familiarity with or pricing of such products. The failure of any of our potential products to gain market acceptance could impair our ability to generate revenue, which could have a material adverse effect on our future business, financial condition, results of operations and cash flows. Our principal competitors in the smoking cessation market have, and any future competitors may have, greater financial and marketing resources than we do, and they may therefore develop products or other technologies similar or superior to ours or otherwise compete more successfully than we do. We have no experience in selling smoking cessation products. Competition in the smoking cessation aid products industry is intense, and we may not be able to successfully compete in the market. In the market for FDA-approved smoking cessation aids, our principal competitors include Pfizer Inc., GlaxoSmithKline PLC, Perrigo Company, Novartis International AG, and Niconovum AB, a subsidiary of Reynolds American Inc. The industry consists of major domestic and international companies, most of which have existing relationships in the markets which we plan to sell, as well as financial, technical, marketing, sales, manufacturing, scaling capacity, distribution and other resources and name recognition substantially greater than ours. In addition, we expect new competitors will enter the markets for our products in the future. Potential customers may choose to do business with our more established competitors, because of their perception that our competitors are more stable, are more likely to complete various projects, can scale operations more quickly, have greater manufacturing capacity, are more likely to continue as a going concern and lend greater credibility to any joint venture. If we are unable to compete successfully against manufacturers of other smoking cessation products, our business could suffer, and we could lose or be unable to obtain market share. We face intense competition in the market for our RED SUN and MAGIC cigarettes and our BRAND A and BRAND B cigarettes, and our failure to compete effectively could have a material adverse effect on our profitability and results of operations. Cigarette companies compete primarily on the basis of product quality, brand recognition, brand loyalty, taste, innovation, packaging, service, marketing, advertising, retail shelf space and price. We are subject to highly competitive conditions in all aspects of our business and we may not be able to effectively market and sell our RED SUN and MAGIC cigarettes or other cigarettes we may introduce to the market such as our BRAND A and BRAND B cigarettes as Modified Risk Cigarettes, upon FDA authorization. The competitive environment and our competitive position can be significantly influenced by weak economic conditions, erosion of consumer confidence, competitors introduction of low-price products or innovative products, higher cigarette taxes, higher absolute prices and larger gaps between price categories, and product regulation that diminishes the ability to differentiate tobacco products. Domestic competitors include Philip Morris USA Inc., Reynolds American Inc., Lorillard Inc., Commonwealth Brands, Inc., Liggett Group LLC, Vector Tobacco Inc. and Star Scientific Inc. International competitors include Philip Morris International Inc., British American Tobacco, JT International SA, Imperial Tobacco Group PLC and regional and local tobacco companies; and in some instances, government-owned tobacco enterprises such as the China National Tobacco Corporation. Our competitors may develop products that are less expensive, safer or more effective, which may diminish or eliminate the commercial success of any potential product that we may commercialize. If our competitors market products that are less expensive, safer or more effective than our potential products, or that reach the market before our potential products, we may not achieve commercial success. The market may choose to continue utilizing existing products for any number of reasons, including familiarity with or pricing of these existing products. The failure of our X-22 smoking cessation aid or our cigarette brands to compete with products marketed by our competitors would impair our ability to generate revenue, which would have a material adverse effect on our future business, financial condition, results of operations and cash flows. Our competitors may: develop and market products that are less expensive or more effective than our products; commercialize competing products before we or our partners can launch our products; and initiate or withstand substantial price competition more successfully than we can. If we fail to stay at the forefront of technological change, we may be unable to compete effectively. Our competitors may render our technologies obsolete by advances in existing technological approaches or the development of new or different approaches, potentially eliminating the advantages that we believe we derive from our research approach and proprietary technologies. Our competitors may: operate larger research and development programs or have substantially greater financial resources than we do; have greater success in recruiting skilled technical and scientific workers from the limited pool of available talent; more effectively negotiate third-party licenses and strategic relationships; and take advantage of acquisition or other opportunities more readily than we can. Government mandated prices, production control programs, shifts in crops driven by economic conditions and adverse weather patterns may increase the cost or reduce the quality of the tobacco and other agricultural products used to manufacture our products. We depend upon independent tobacco farmers to grow our specialty proprietary tobaccos with specific nicotine contents for our products. As with other agricultural commodities, the price of tobacco leaf can be influenced by imbalances in supply and demand, and crop quality can be influenced by variations in weather patterns, diseases and pests. We must also compete with other tobacco companies for contract production with independent tobacco farmers. Tobacco production in certain countries is subject to a variety of controls, including government mandated prices and production control programs. Changes in the patterns of demand for agricultural products could cause farmers to plant less tobacco. Any significant change in tobacco leaf prices, quality and quantity could affect our profitability and our business. Our future success depends on our ability to retain key personnel. Our success will depend to a significant extent on the continued services of our senior management team, and in particular Joseph Pandolfino, our Chief Executive Officer, Henry Sicignano III, our Chief Financial Officer and President, and Michael Moynihan, Ph.D., our Vice President of R&D. The loss or unavailability of any of these individuals may significantly delay or prevent the development of our potential products and other business objectives by diverting management s attention to transition matters. While each of these individuals is party to employment agreements with us, they could terminate their relationships with us at any time, and we may be unable to enforce any applicable employment or non-compete agreements. We also rely on consultants and advisors to assist us in formulating our research and development, manufacturing, distribution, marketing and sales strategies. All of our consultants and advisors are either self-employed or employed by other organizations, and they may have conflicts of interest or other commitments, such as consulting or advisory contracts with other organizations, that may affect their ability to contribute to us. Product liability claims, product recalls or other claims could cause us to incur losses or damage our reputation. The risk of product liability claims or product recalls, and associated adverse publicity, is inherent in the development, manufacturing, marketing and sale of tobacco and smoking cessation products. We do not currently have product liability insurance for our products or our potential products and do not expect to be able to obtain product liability insurance at reasonable commercial rates for these products. Any product recall or lawsuit seeking significant monetary damages may have a material adverse effect on our business and financial condition. A successful product liability claim against us could require us to pay a substantial monetary award. We cannot assure you that such claims will not be made in the future. Risks Related to Regulatory Approvals and Insurance Reimbursement If we fail to obtain FDA and foreign regulatory approvals of X-22 as a smoking cessation aid and FDA authorization to market BRAND A and BRAND B as Modified Risk Cigarettes, we will be unable to commercialize these potential products in and outside the U.S., other than the sale of our BRAND A and BRAND B cigarettes as conventional cigarettes. There can be no assurance that our X-22 smoking cessation aid will be approved by the FDA, European Medicines Agency, or any other governmental body. In addition, there can be no assurance that all necessary approvals will be granted for our potential products or that review or actions will not involve delays caused by requests for additional information or testing that could adversely affect the time to market for and sale of our potential products. Our ability to complete the FDA-approval process in a timely manner is dependent, in part, on our ability to obtain "Fast Track" designation for X-22 by the FDA. We submitted a request for Fast Track designation for X-22, and on August 18, 2011, the FDA informed us that it would not grant the designation of X-22 as a Fast Track product at this time because we did not demonstrate that X-22 shows potential to address an unmet medical need. Except for our Phase II-B clinical trial, all smoking cessation studies with very low nicotine ("VLN") cigarettes containing our proprietary tobacco were independent studies and were not sponsored by 22nd Century Ltd under its own Investigational New Drug ("IND"). We plan to reapply for Fast Track designation, but not until results of a clinical trial conducted by us demonstrates an advantage (over currently approved smoking cessation products) in one of the following areas: efficacy, safety or improvement in some other factor such as compliance (a patient using a product as directed) or convenience. There is no guarantee that the FDA will grant Fast Track designation to X-22. We may also not obtain Priority Review of our X-22 New Drug Application (NDA), which would further delay FDA approval of X-22. The length of the FDA s review of a New Drug Application without a Priority Review designation is normally ten months from the date of filing of the New Drug Application, although it is possible in certain cases for such review time to be longer. However, the FDA s goal for reviewing a product with Priority Review status is normally six months from the date of the filing of a NDA. If we do not obtain Priority Review of our New Drug Application, we would then expect the timing of FDA approval of X-22 to be extended several additional months. Even if X-22 is approved by the FDA, the FDA may require the product to only be prescribed to patients who have already failed to quit smoking with another approved therapy. Further, failure to comply with applicable regulatory requirements can, among other things, result in the suspension of regulatory approval as well as possible civil and criminal sanctions. The development, testing, manufacturing and marketing of our potential products are subject to extensive regulation by governmental authorities in the United States and throughout the world. In particular, the process of obtaining approvals by the FDA, European Medicines Agency and other international FDA equivalent agencies in targeted countries is costly and time consuming, and the time required for such approval is uncertain. Our X-22 smoking cessation aid must undergo rigorous clinical testing and an extensive regulatory approval process mandated by the FDA or EMEA. Such regulatory review includes the determination of manufacturing capability and product performance. Generally, only a small percentage of pharmaceutical products are ultimately approved for commercial sale. The scope of review, including product testing and exposure studies, to be required by the FDA under the Tobacco Control Act in order for cigarettes such as BRAND A and BRAND B to be marketed as Modified Risk Cigarettes has not yet been fully established. We may be unsuccessful in establishing that BRAND A or BRAND B are Modified Risk Cigarettes, and we may fail to demonstrate that either BRAND A or BRAND B significantly reduces exposure to certain tobacco smoke toxins. Even upon demonstrating significant reduced exposure to certain tobacco smoke toxins, the FDA may decide that allowing a modified risk claim is not in the best interest of the public health, and the FDA may not allow us to market our BRAND A and/or BRAND B cigarettes as Modified Risk Cigarettes. Furthermore, the FDA could force us to remove from the U.S. market our other tobacco products such as RED SUN or MAGIC and even BRAND A and/or BRAND B after FDA authorization to market BRAND A and BRAND B as Modified Risk Cigarettes. In the future, we intend to distribute and sell our potential products outside of the United States, which will subject us to further regulatory risk. In addition to seeking approval from the FDA for our X-22 smoking cessation aid in the United States, we intend to seek governmental approvals required to market X-22 and our other potential products in other countries. Marketing of our X-22 smoking cessation aid is not permitted in certain countries until we have obtained required approvals or exemptions in the individual country. The regulatory review process varies from country to country, and approval by foreign governmental authorities is unpredictable, uncertain and generally expensive. Our ability to market our potential products could be substantially limited due to delays in receipt of, or failure to receive, the necessary approvals or clearances. We anticipate commencing the applications required in some or all of these countries following approval by the FDA; however, we may decide to file applications in advance of the FDA approval if we determine such filings to be both time and cost effective. If we export any of our potential products or products that have not yet been cleared for commercial distribution in the United States, such products may be subject to FDA export restrictions. Failure to obtain necessary regulatory approvals could impair our ability to generate revenue from international sources. Market acceptance of our X-22 smoking cessation aid could be limited if users are unable to obtain adequate reimbursement from third-party payers. Government health administration authorities, private health insurers and other organizations generally provide reimbursement for FDA-approved smoking cessation products, and our commercial success could depend in part on these third-party payers agreeing to reimburse patients for the costs of our X-22 smoking cessation aid. Even if we succeed in bringing our X-22 smoking cessation aid to market, there is no assurance that third-party payers will consider X-22 cost effective or provide reimbursement in whole or in part for its use. Significant uncertainty exists as to the reimbursement status of newly approved health care products. Our X-22 smoking cessation aid is intended to replace or alter existing therapies or procedures. These third-party payers may conclude that our X-22 smoking cessation aid is less safe, effective or cost-effective than these existing therapies or procedures. Therefore, third-party payers may not approve X-22 for reimbursement. If third-party payers do not approve our potential products for reimbursement or fail to reimburse for them adequately, sales could suffer as some physicians or their patients could opt for a competing product that is approved for reimbursement or is adequately reimbursed. Even if third-party payers make reimbursement available, these payers reimbursement policies may adversely affect our ability and the ability of our potential collaborators to sell our potential products on a profitable basis. The trend toward managed healthcare in the United States and, the Affordable Care Act enacted on March 23, 2010, and legislative proposals to reform healthcare and government insurance programs could significantly influence the purchase of healthcare services and products, resulting in lower prices and reduced demand for our potential products which could adversely affect our business, financial condition, results of operations and cash flows. In addition, legislation and regulations affecting the pricing of our potential products may change in ways adverse to us before or after the FDA or other regulatory agencies approve any of our potential products for marketing. While we cannot predict the likelihood of any of these legislative or regulatory proposals, if any government or regulatory agency adopts these proposals, they could materially adversely affect our business, financial condition, results of operations and cash flows. Our clinical trials for any of our potential products may produce negative or inconclusive results and we may decide, or regulators may require us, to conduct additional clinical and/or preclinical testing for these potential products or cease our trials. We do not know whether clinical trials of our potential products will demonstrate safety and efficacy sufficiently to result in marketable products. Because our clinical trials for our X-22 smoking cessation aid and any other potential products may produce negative or inconclusive results, we may decide, or regulators may require us, to conduct additional clinical and/or preclinical testing for these potential products or cease our clinical trials. If this occurs, we may not be able to obtain approval or marketing authorization for these potential products or our anticipated time of bringing these potential products to the market may be substantially delayed and we may also experience significant additional development costs. We may also be required to undertake additional clinical testing if we change or expand the indications for our potential products. Risks Related to the Tobacco Industry Our business faces significant governmental action aimed at increasing regulatory requirements with the goal of preventing the use of tobacco products. Cigarette companies face significant governmental action, especially in the United States pursuant to the Tobacco Control Act, including efforts aimed at reducing the incidence of tobacco use, restricting marketing and advertising, imposing regulations on packaging, warnings and disclosure of flavors or other ingredients, prohibiting the sale of tobacco products with certain flavors or other characteristics, limiting or prohibiting the sale of tobacco products by certain retail establishments and the sale of tobacco products in certain packaging sizes, and seeking to hold retailers and distributors responsible for the adverse health effects associated with both smoking and exposure to environmental tobacco smoke. Governmental actions, combined with the diminishing social acceptance of smoking and private actions to restrict smoking, have resulted in reduced industry volume in the United States and certain other countries, and we expect that these factors will continue to reduce consumption levels in these countries. Certain of such actions may have a favorable impact on our X-22 smoking cessation aid, or on our BRAND A and BRAND B cigarettes if we are able to market them as Modified Risk Cigarettes. However, there is no assurance of such favorable impact and such actions may have a negative impact on our ability to market RED SUN and MAGIC. Significant regulatory developments will take place over the next few years in many markets, driven principally by the World Health Organization s Framework Convention on Tobacco Control ("FCTC"). The FCTC is the first international public health treaty on tobacco, and its objective is to establish a global agenda for tobacco regulation with the purpose of reducing initiation of tobacco use and encouraging cessation. In addition, the FCTC has led to increased efforts by tobacco control advocates and public health organizations to reduce the appeal of tobacco products. Partly because of some or a combination of these efforts, unit sales of tobacco products in certain markets, principally Western Europe and Japan, have been in general decline and we expect this trend to continue. Our operating results could be significantly affected by any significant decrease in demand for cigarettes, any significant increase in the cost of complying with new regulatory requirements and requirements that lead to a commoditization of tobacco products such as the 2012 implementation of plain packaging in Australia. If implemented in the future, the FDA requirement regarding graphic health warnings on cigarette packaging and in cigarette advertising is likely to have a negative impact on sales of our products. In November 2010, as required by the Tobacco Control Act, the FDA issued a proposed rule to modify the required warnings that appear on cigarette packages and in cigarette advertisements. These warning were finalized on June 21, 2011 and consist of nine new textual warning statements accompanied by color graphics depicting the negative health consequences of smoking. The FDA selected nine images from the originally proposed 36 images after reviewing the relevant scientific literature, analyzing the results from an 18,000 person study and considering more than 1,700 comments from a variety of groups. The graphic health warnings will be located beneath the cellophane wrapping on cigarette packages, and will comprise the top 50 percent of the front and rear panels of cigarette packages. The graphic health warnings will occupy 20 percent of a cigarette advertisement and will be located at the top of the advertisement. Each warning is accompanied by a smoking cessation phone number, 1-800-QUIT-NOW. Although these graphic health warnings were supposed to be implemented in September 2012, a federal judge ruled that these warnings are unconstitutional. If and when these graphic health warnings are implemented, all cigarettes manufactured for sale or distribution in the United States will need to include these new graphic health warnings on their packages. Any reduction in the number of smokers will probably reduce the demand for MAGIC and RED SUN, as well as X-22, BRAND A and BRAND B, if and when approved/authorized by the FDA. MAGIC, RED SUN, BRAND A and BRAND B will be subject to these new packaging and advertising regulations. It is unclear at this time whether the FDA may require X-22 and SPECTRUM to be subject to these new packaging and advertising regulations. We may become subject to litigation related to cigarette smoking and exposure to environmental tobacco smoke, or ETS, which could severely impair our results of operations and liquidity. Although we are not currently subject to legal proceedings, we may become subject to litigation related to the sale of our RED SUN and MAGIC cigarettes and, upon FDA authorization, our BRAND A and BRAND B cigarettes. Legal proceedings covering a wide range of matters related to tobacco use are pending or threatened in various U.S. and foreign jurisdictions. Various types of claims are raised in these proceedings, including product liability, consumer protection, antitrust, tax, contraband shipments, patent infringement, employment matters, claims for contribution and claims of competitors and distributors. Litigation is subject to uncertainty and it is possible that there could be adverse developments in pending cases. An unfavorable outcome or settlement of pending tobacco related litigation could encourage the commencement of additional litigation. The variability in pleadings, together with the actual experience of management in litigating claims, demonstrates that the monetary relief that may be specified in a lawsuit bears little relevance to the ultimate outcome. Damages claimed in some tobacco-related litigation are significant and, in certain cases range into the billions of dollars. We anticipate that new cases will continue to be filed. The FCTC encourages litigation against tobacco product manufacturers. It is possible that our results of operations, cash flows or financial position could be materially affected by an unfavorable outcome or settlement of litigation. Cigarettes are subject to substantial taxes. Significant increases in cigarette-related taxes have been proposed or enacted and are likely to continue to be proposed or enacted in numerous jurisdictions. These tax increases may affect our sales and profitability and make us less competitive versus certain of our competitors. Tax regimes, including excise taxes, sales taxes and import duties, can disproportionately affect the retail price of manufactured cigarettes versus other tobacco products, or disproportionately affect the relative retail price of our RED SUN and MAGIC cigarettes and, upon FDA authorization, our BRAND A and BRAND B cigarettes versus lower-priced cigarette brands manufactured by our competitors. Increases in cigarette taxes are expected to continue to have an adverse impact on sales of cigarettes resulting in (i) lower consumption levels, (ii) a shift in sales from manufactured cigarettes to other tobacco products or to lower-price cigarette categories, (iii) a shift from local sales to legal cross-border purchases of lower price products, and (iv) illicit products such as contraband and counterfeit. We may become subject to governmental investigations on a range of matters. Tobacco companies are often subject to investigations, including allegations of contraband shipments of cigarettes, allegations of unlawful pricing activities within certain markets, allegations of underpayment of custom duties and/or excise taxes, and allegations of false and misleading usage of descriptors such as "lights" and "ultra lights." We cannot predict the outcome of any to which we may become subject, and we may be materially affected by an unfavorable outcome of future investigations. Risks Related to Intellectual Property Our proprietary rights may not adequately protect our intellectual property, products and potential products, and if we cannot obtain adequate protection of our intellectual property, products and potential products, we may not be able to successfully market our products and potential products. Our commercial success will depend in part on obtaining and maintaining intellectual property protection for our technologies, products and potential products. We will only be able to protect our technologies, products and potential products from unauthorized use by third parties to the extent that valid and enforceable patents cover them, or other market exclusionary rights apply. The patent positions of life sciences companies, like ours, can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in such companies patents has emerged to date in the United States. The general patent environment outside the United States also involves significant uncertainty. Accordingly, we cannot predict the breadth of claims that may be allowed or that the scope of these patent rights could provide a sufficient degree of future protection that could permit us to gain or keep our competitive advantage with respect to these products and technology. Additionally, life science companies like ours are often dependent on creating a pipeline of products. We may not be able to develop additional potential products or proprietary technologies that produce commercially viable products or that are themselves patentable. Although there are currently no challenges to any portion of our intellectual property, our issued patents may be subject to challenge and possibly invalidated by third parties. Changes in either the patent laws or in the interpretations of patent laws in the United States or other countries may diminish the value of our intellectual property. In addition, others may independently develop similar or alternative products and technologies that may be outside the scope of our intellectual property. Should third parties obtain patent rights to similar products or technology, this may have an adverse effect on our business. We also rely on trade secrets to protect our technology, products and potential products, especially where we do not believe patent protection is appropriate or obtainable. Trade secrets, however, are difficult to protect. While we believe that we use reasonable efforts to protect our trade secrets, our own or our strategic partners employees, consultants, contractors or advisors may unintentionally or willfully disclose our information to competitors. We seek to protect this information, in part, through the use of non-disclosure and confidentiality agreements with employees, consultants, advisors and others. These agreements may be breached, and we may not have adequate remedies for a breach. In addition, we cannot ensure that those agreements will provide adequate protection for our trade secrets, know-how or other proprietary information or prevent their unauthorized use or disclosure. To the extent that consultants or key employees apply technological information independently developed by them or by others to our products and potential products, disputes may arise as to the proprietary rights of the information, which may not be resolved in our favor. Key employees are required to assign all intellectual property rights in their discoveries to us. However, these key employees may terminate their relationship with us, and we cannot preclude them indefinitely from dealing with our competitors. If our trade secrets become known to competitors with greater experience and financial resources, the competitors may copy or use our trade secrets and other proprietary information in the advancement of their products, methods or technologies. If we were to prosecute a claim that a third party had illegally obtained and was using our trade secrets, it could be expensive and time consuming and the outcome could be unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets than courts in the United States. Moreover, if our competitors independently develop equivalent knowledge, we would lack any contractual claim to this information, and our business could be harmed. The ability to commercialize our potential products will depend on our ability to sell such products without infringing the patent or proprietary rights of third parties. If we are sued for infringing intellectual property rights of third parties, such litigation could be costly and time consuming and an unfavorable outcome could have a significant adverse effect on our business. The ability to commercialize our potential products will depend on our ability to sell such products without infringing the patents or other proprietary rights of third parties. Third-party intellectual property rights in our field are complicated, and third-party intellectual property rights in these fields are continuously evolving. While we have conducted searches for such third-party intellectual property rights, we have not performed specific searches for third-party intellectual property rights that may raise freedom-to-operate issues, and we have not obtained legal opinions regarding commercialization of our potential products. As such, there may be existing patents that may affect our ability to commercialize our potential products. In addition, because patent applications are published up to 18 months after their filing, and because patent applications can take several years to issue, there may be currently pending third-party patent applications and freedom-to-operate issues that are unknown to us, which may later result in issued patents. If a third-party claims that we infringe on its patents or other proprietary rights, we could face a number of issues that could seriously harm our competitive position, including: infringement claims that, with or without merit, can be costly and time consuming to litigate, can delay the regulatory approval process and can divert management s attention from our core business strategy; substantial damages for past infringement which we may have to pay if a court determines that our products or technologies infringe upon a competitor s patent or other proprietary rights; a court order prohibiting us from commercializing our potential products or technologies unless the holder licenses the patent or other proprietary rights to us, which such holder is not required to do; if a license is available from a holder, we may have to pay substantial royalties or grant cross licenses to our patents or other proprietary rights; and redesigning our process so that it does not infringe the third-party intellectual property, which may not be possible, or which may require substantial time and expense including delays in bringing our potential products to market. Such actions could harm our competitive position and our ability to generate revenue and could result in increased costs. Our patent applications may not result in issued patents, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours. We own 12 issued patents and we have the exclusive license to an additional 95 issued patents in an aggregate of 78 countries. In addition, we own or exclusively license approximately 39 pending patent applications, of which we own 24 such patent applications and have an exclusive license to 15 such patent applications. We cannot assure you these patent applications will issue, in whole or in part, as patents. Patent applications in the United States are maintained in secrecy until the patents are published or are issued. Since publication of discoveries in the scientific or patent literature tends to lag behind actual discoveries by several months, we cannot be certain that we are the first creator of inventions covered by pending patent applications or the first to file patent applications on these inventions. We also cannot be certain that our pending patent applications will result in issued patents or that any of our issued patents will afford protection against a competitor. In addition, patent applications filed in foreign countries are subject to laws, rules and procedures that differ from those of the United States, and thus we cannot be certain that foreign patent applications related to U.S. patents will be issued. Furthermore, if these patent applications issue, some foreign countries provide significantly less effective patent enforcement than in the United States. The status of patents involves complex legal and factual questions and the breadth of claims allowed is uncertain. Accordingly, we cannot be certain that the patent applications that we file will result in patents being issued, or that our patents and any patents that may be issued to us in the near future will afford protection against competitors with similar technology. In addition, patents issued to us may be infringed upon or designed around by others and others may obtain patents that we need to license or design around, either of which would increase costs and may adversely affect our operations. We license certain patent rights from third-party owners. If such owners do not properly maintain or enforce the patents underlying such licenses, our competitive position and business prospects could be harmed. We license rights to third-party intellectual property that is necessary or useful for our business, and we may enter into additional licensing agreements in the future. Our success could depend in part on the ability of some of our licensors to obtain, maintain and enforce patent protection for their intellectual property, in particular, those patents to which we have secured exclusive rights. Our licensors may not successfully prosecute the patent applications to which we are licensed. Even if patents are issued with respect to these patent applications, our licensors may fail to maintain these patents, may determine not to pursue litigation against other companies that are infringing these patents, or may pursue such litigation less aggressively than we could. Without protection for the intellectual property we license, other companies might be able to offer substantially identical products for sale, which could adversely affect our competitive business position and harm our business prospects. Our two worldwide exclusive licenses, one from North Carolina State University ("NCSU") and the other from National Research Council of Canada, Plant Biotechnology Institute in Saskatoon, Canada ("NRC"), each involve multiple patent families. The exclusive rights under the NCSU agreement expires on the date on which the last patent or registered plant variety covered by the subject license expires in the country or countries where such patents or registered plant varieties are in effect. The NCSU license relates predominately to issued patents, and the NCSU license will expire in 2023. The exclusive rights under the NRC agreement expires on the date on which the last patent or covered by the subject license expires in the country or countries where such patents are in effect. The NRC license relates predominately to patent applications, and the NRC license will expire in 2028. Since December 31, 2012 the Company paid NCSU $400,000 and issued a note dated February 1, 2013 for $474,893; the note is unsecured, bears interest at 5% and matures the earlier of October 1, 2013 or the closing of a licensing agreement with up front proceeds of at least $1.5 million. NCSU also agreed to not to invoke any rights to terminate the Company s license agreement for nonpayment or nonperformance until October 1, 2013. In the event the note is not paid by October 1, 2013, NCSU will have the right to terminate the license agreement. The loss of either of these worldwide exclusive licenses would have a material adverse effect on our operations and business prospects. Risks Related to Ownership of Our Common Stock An active trading market for our common stock may not develop or be sustained, and you may not be able to resell your shares at or above the price at which you purchased them. An active trading market for our shares may never develop or be sustained. In the absence of an active trading market for our common stock, shares of common stock may not be able to be resold at or above the purchase price of such shares. Although there can be no assurances, we expect that our common stock will continue to be quoted on the OTC Bulletin Board, an over-the-counter quotation system, on which the shares of our common stock are currently quoted. However, even if our common stock continues to be quoted on the OTC Bulletin Board, it is unlikely that an active market for our common stock will develop in the foreseeable future. It may be more difficult to dispose of shares or obtain accurate quotations as to the market value of our common stock compared to securities of companies whose shares are traded on the NASDAQ Stock Market or other stock exchanges. Trading in our common stock is currently limited and our stock price may be highly volatile and could decline in value. Our common stock is currently traded on the OTC Bulletin Board, and, therefore, the trading volume is currently more limited and sporadic than if our common stock were traded on a national stock exchange such as the NASDAQ Stock Market or the NYSE. Further, the market prices for securities in general have been highly volatile and may continue to be highly volatile in the future. The following factors, in addition to other risk factors described in this section, may have a significant impact on the market price of our common stock: results from and any delays in any clinical trials programs; failure or delays in entering potential products into clinical trials; failure or discontinuation of any of our research programs; delays in establishing new strategic relationships; delays in the development of our potential products and commercialization of our potential products; market conditions in our sector and issuance of new or changed securities analysts reports or recommendations; general economic conditions, including recent adverse changes in the global financial markets; actual and anticipated fluctuations in our quarterly financial and operating results; developments or disputes concerning our intellectual property or other proprietary rights; introduction of technological innovations or new commercial products by us or our competitors; issues in manufacturing or distributing our products or potential products; market acceptance of our products or potential products; third-party healthcare reimbursement policies; FDA or other United States or foreign regulatory actions affecting us or our industry; litigation or public concern about the safety of our products or potential products; additions or departures of key personnel; third-party sales of large blocks of our common stock; sales of our common stock by our executive officers, directors or significant stockholders; and equity sales by us of our common stock or securities convertible into common stock to fund our operations. These and other external factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock. In addition, in the past, when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock. If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management. The conversion of our Series A-1 Preferred Stock and exercise of outstanding warrants, convertible notes and options may depress our stock price and will likely result in significant dilution to our common stockholders. There are a significant number of outstanding warrants, convertible notes and options to purchase shares of our stock and we have issued shares of Series A-1 Preferred Stock that are convertible into our common stock. If the market price of our common stock exceeds the exercise price of outstanding warrants and options or the conversion price of our convertible notes and shares of Series A-1 Preferred Stock, holders of those securities may be likely to exercise or convert such shares and sell the common stock acquired in the open market. Sales of a substantial number of shares of our common stock in the public market by holders of warrants, convertible notes, options or preferred shares may depress the prevailing market price for our common stock and could impair our ability to raise capital through the future sale of our equity securities. Additionally, if the holders of outstanding options, convertible notes, warrants or preferred shares exercise or convert those shares, as applicable, our common stockholders will incur dilution in their relative percentage ownership. The prospect of this possible dilution may also impact the price of our common stock. In addition, our Series A-1 Preferred Stock and the majority of our outstanding warrants contain anti-dilution provisions, which may, under certain circumstances, reduce the exercise or conversion price or increase the number of shares issuable, or both. Any downward adjustment to the conversion price of our Series A-1 Preferred Stock may depress our stock price and will result in significant dilution to our common stockholders. The conversion price of the Series A-1 Preferred Stock is subject to adjustment in certain events. See "Description of Securities – Preferred Stock" for a discussion of the events that could cause an adjustment of the conversion price of such shares. This potential reduction in conversion price could significantly increase the number of shares that could be issued upon conversion of the Series A-1 Preferred Stock and would result in substantial dilution to the other holders of common stock. Our common stock is a "penny stock," which is likely to limit its liquidity. The market price of our common stock is, and will likely remain for the foreseeable future, less than $5.00 per share, and therefore will be a "penny stock" according to SEC rules, unless our common stock is listed on a national securities exchange. The OTC Bulletin Board is not a national securities exchange. Designation as a "penny stock" requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of current holders of our common stock to sell their shares. Such rules may also deter broker-dealers from recommending or selling our common stock, which may further limit its liquidity. This may also make it more difficult for us to raise additional capital in the future. Because of such expected illiquidity, it will likely be difficult to re-sell shares of our common stock as desired. We are controlled by our current officers and directors. As of March 15, 2013, our directors and executive officers as a group beneficially owned approximately 38.1% of our common stock. Accordingly, our directors and executive officers will have substantial influence over, and may have the ability to control, the election of our board of directors and the outcome of issues submitted to a vote of our stockholders. We do not expect to declare any dividends on our common stock in the foreseeable future. We have not paid cash dividends to date on our common stock. We currently intend to retain our future earnings, if any, to fund the development and growth of our business, and we do not anticipate paying any cash dividends on our common stock for the foreseeable future. In addition, the terms of the Series A-1 Preferred Stock prevent the payment of dividends on our common stock unless holders of at least 67% in stated value of the then-outstanding shares of Series A-1 Preferred Stock consent to such dividend. Additionally, the terms of any future debt facilities may preclude us from paying dividends on the common stock. As a result, capital appreciation, if any, of our common stock could be the sole source of gain for the foreseeable future. Anti-takeover provisions contained in our articles of incorporation and bylaws, as well as provisions of Nevada law, could impair a takeover attempt. Our amended and restated articles of incorporation and bylaws currently contain provisions that, together with Nevada law, could have the effect of rendering more difficult or discouraging an acquisition deemed undesirable by our board of directors. Our corporate governance documents presently include the following provisions: authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock; and limiting the liability of, and providing indemnification to, our directors and officers. These provisions, alone or together, could delay hostile takeovers and changes in control of us or changes in our management. As a Nevada corporation, we also may become subject to the provisions Nevada Revised Statutes Sections 78.378 through 78.3793, which prohibit an acquirer, under certain circumstances, from voting shares of a corporation s stock after crossing specific threshold ownership percentages, unless the acquirer obtains the approval of the stockholders of the issuer corporation. The first such threshold is the acquisition of at least one-fifth, but less than one-third of the outstanding voting power of the issuer. We may become subject to the above referenced Statutes if we have 200 or more stockholders of record, at least 100 of whom are residents of the State of Nevada, and do business in the State of Nevada directly or through an affiliated corporation. As a Nevada corporation, we are subject to the provisions of Nevada Revised Statutes Sections 78.411 through 78.444, which prohibit an "interested stockholder" from entering into a combination with the corporation, unless certain conditions are met. An "interested stockholder" is a person who, together with affiliates and associates, beneficially owns (or within the prior two years did own) 10 percent or more of the corporation s voting stock. Any provision of our amended and restated articles of incorporation, our bylaws or Nevada law that has the effect of delaying or deterring a change in control of our Company could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock. Principal Stockholders The following table sets forth information regarding the beneficial ownership of our common stock as of March 15, 2013, by (i) each person who, to our knowledge, owns more than 5% of our common stock, (ii) each of our current directors and executive officers, and (iii) all of our current directors and executive officers as a group. Derivative securities exercisable or convertible into shares of our common stock within sixty (60) days of March 15, 2013 are deemed to be beneficially owned and outstanding for computing the share ownership and percentage of the person holding securities, but are not deemed outstanding for computing the percentage of any other person. Beneficial ownership representing less than 1% is denoted with an asterisk (*). The address of named beneficial owners that are officers and/or directors is: c/o 22nd Century Group, Inc., 9530 Main Street, Clarence, New York 14031. The following table is based upon information supplied by officers and directors, and with respect to 5% or greater stockholders who are not officers or directors, information filed with the SEC. Name of Beneficial Owner Number of Shares Beneficially Owned Percent of Class Beneficially Owned (1) Management & Directors Joseph Pandolfino (2) 7,880,109 19.6% Henry Sicignano III (3) 6,170,673 15.8% Michael R. Moynihan, Ph.D. (4) 1,631,657 4.2% Joseph Alexander Dunn, Ph.D.(5) 251,500 * James W. Cornell (6) 251,500 * All directors and executive officers as a group (5 persons) (2)-(6) 16,059,602 38.1% Other 5% Owners Clearwater Partners, LLC (7) 5,265,941 13.3% Angelo J. Tomasello (8) 4,542,491 11.5% Sabby Volatility Warrant Master Fund, Ltd. (9) 2,500,000 6.1% Sabby Heathcare Volatility Master Fund, Ltd. (10) 4,203,858 9.9% (1) Based on 38,259,365 shares of common stock issued and outstanding (including outstanding restricted stock), as of March 15, 2013. (2) Includes (a) 2,004,574 shares of common stock issuable to Mr. Pandolfino upon exercise of warrants and (b) 5,875,535 shares of common stock. (3) Consists of (a) 2,252,603 shares of common stock held by Henry Sicignano III (including 550,000 restricted shares issued as equity incentive awards under the Company s Equity Incentive Plan), (b) 2,542,347 shares of common stock held by Henry Sicignano III Group, LLC, (c) 396,441 shares of common stock issuable to Mr. Sicignano upon exercise of warrants, (d) 100,000 shares of common stock issuable to Mr. Sicignano upon exercise of stock options and (e) 879,282 shares of common stock issuable to Henry Sicignano III Group, LLC upon exercise of warrants. Mr. Sicignano is Managing Member of Henry Sicignano III Group, LLC and, accordingly, exercises voting and investment power with respect to the shares held by Henry Sicignano III Group, LLC. 450,000 of the shares issued to Mr. Sicignano under the Company s Employee Incentive Plan (EIP) are grants that are subject to potential forfeiture over time in the event Mr. Sicignano ceases employment with the Company prior to April 1, 2015. On each anniversary of April 1, 2012 until April 1, 2015, the number of shares subject to forfeiture decreases by 150,000 shares. Mr. Sicignano also holds 100,000 performance based shares of restricted stock issued as equity incentive awards under the Company s EIP, which are subject to forfeiture unless certain performance milestones are achieved. (4) Includes (a) 1,038,934 shares of common stock, (b) 417,723 shares of common stock issuable upon exercise of warrants and (c) 175,000 shares issuable upon the exercise of stock options. (5) Includes (a) 110,000 shares of common stock, (b) 31,500 shares of common stock issuable upon exercise of warrants and (c) 110,000 shares issuable upon the exercise of stock options. (6) Includes (a) 110,000 shares of common stock, (b) 31,500 shares of common stock issuable upon exercise of warrants and (c) 110,000 shares issuable upon the exercise of stock options. (7) Includes (a) 3,905,516 shares of common stock and (b) 1,360,425 shares of common stock issuable upon exercise of warrants. Richard G. Saffire, Managing Member of Clearwater Partners, LLC exercises voting and investment power with respect to shares owned by Clearwater Partners, LLC. The address of Clearwater Partners, LLC is 34 Sunburst Circle, East Amherst, New York 14051. (8) Includes (a) 3,301,909 shares of common stock, (b) 1,220,582 shares of common stock issuable upon exercise of warrants and (c) 20,000 shares of common stock issuable upon exercise of stock options. The address of Angelo Tomasello is 4720 Spaulding Drive, Clarence, New York 14031. (9) Consists of shares of common stock issuable upon the conversion of an aggregate of 500 shares of Series A-1 Preferred Stock and upon the exercise of Warrants. The Series A-1 Preferred Stock and the Warrants contain exercise and conversion limitations providing that a holder thereof may not convert or exercise (as the case may be) to the extent that, if after giving effect to such conversion or exercise (as the case may be), the holder or any of its affiliates would beneficially own in excess of 9.99% of our outstanding shares of common stock immediately after giving effect to such conversion or exercise (as the case may be). However, the 9.99% limitation would not prevent the shareholder from acquiring and selling in excess of 9.99% of our common stock through a series of acquisitions and sales while never beneficially owning more than 9.99% in aggregate. Sabby Management, LLC serves as the investment manager of Sabby Volatility Warrant Master Fund, Ltd. and, as such, Sabby Management, LLC shares voting and investment powers with respect to these shares on behalf of Sabby Volatility Warrant Master Fund, Ltd. The address for Sabby Volatility Warrant Master Fund, Ltd. is c/o Ogier Fiduciary Services (Cayman) Limited, 89 Nexus Way, Camana Bay, Grand Cayman KY1-9007, Cayman Islands. As manager of Sabby Management, LLC, Hal Mintz also shares voting and investment power on behalf of Sabby Volatility Warrant Master Fund, Ltd. Each of Sabby Management, LLC and Hal Mintz disclaim beneficial ownership over the securities covered by this prospectus except to the extent of their pecuniary interest therein. (10) Consists of shares of common stock issuable upon the conversion of an aggregate of 2,000 shares of Series A-1 Preferred Stock and upon the exercise of Warrants. The Series A-1 Preferred Stock and the Warrants contain exercise and conversion limitations providing that a holder thereof may not convert or exercise (as the case may be) to the extent that, if after giving effect to such conversion or exercise (as the case may be), the holder or any of its affiliates would beneficially own in excess of 9.99% of our outstanding shares of common stock immediately after giving effect to such conversion or exercise (as the case may be). However, the 9.99% limitation would not prevent the shareholder from acquiring and selling in excess of 9.99% of our common stock through a series of acquisitions and sales while never beneficially owning more than 9.99% in aggregate. Sabby Management, LLC serves as the investment manager of Sabby Healthcare Volatility Master Fund, Ltd. and, as such, Sabby Management, LLC shares voting and investment powers with respect to these shares on behalf of Sabby Healthcare Volatility Master Fund, Ltd. The address for Sabby Healthcare Volatility Master Fund, Ltd. is c/o Ogier Fiduciary Services (Cayman) Limited, 89 Nexus Way, Camana Bay, Grand Cayman KY1-9007, Cayman Islands. As manager of Sabby Management, LLC, Hal Mintz also shares voting and investment power on behalf of Sabby Healthcare Volatility Master Fund, Ltd. Each of Sabby Management, LLC and Hal Mintz disclaim beneficial ownership over the securities covered by this prospectus except to the extent of their pecuniary interest therein. Selling Stockholders On January 11, 2013, Sabby Volatility Warrant Master Fund Ltd. and Sabby Healthcare Volatility Master Fund, Ltd., collectively referred to as the selling stockholders, acquired an aggregate of 2,500 shares of newly created Series A-1 Preferred Stock and Warrants for an aggregate purchase price of $2,500,000. The Series A-1 Preferred Stock and the Warrants contain exercise and conversion limitations providing that a holder thereof may not convert or exercise (as the case may be) to the extent that, if after giving effect to such conversion or exercise (as the case may be), the holder or any of its affiliates would beneficially own in excess of 9.99% of the outstanding shares of common stock immediately after giving effect to such conversion or exercise (as the case may be). However, the 9.99% limitation would not prevent a selling stockholder from acquiring and selling in excess of 9.99% of our common stock through a series of acquisitions and sales while never beneficially owning more than 9.99% in aggregate. This prospectus relates to the resale by the selling stockholders from time to time of up to an aggregate of 6,250,000 shares that are issuable to the selling stockholders. Pursuant to a Registration Rights Agreement between us and the selling stockholders, this prospectus covers the resale of the number of shares currently issuable (i) upon conversion of our Series A-1 Preferred Stock and (ii) upon the exercise of Series B Warrants. We will not receive any proceeds from the sale of common stock by the selling stockholders, but we will receive funds from the exercise of the Series B Warrants, if exercised. The table below, which was prepared based on information supplied to us by the selling stockholders, sets forth information regarding the beneficial ownership of outstanding shares of our common stock owned by the selling stockholders and the shares that they may sell or otherwise dispose of from time to time under this prospectus. Each of the selling stockholders, or their respective affiliates, transferees, donees or their successors, may resell, from time to time, all, some or none of the shares of our common stock covered by this prospectus, as provided in this prospectus under the section entitled "Plan of Distribution" and in any applicable prospectus supplement. However, we do not know when, in what amount, or at what specific prices the selling stockholders may offer their shares for sale under this prospectus, if any. Each selling stockholder s percentage of ownership in the following table is based upon 38,259,365 shares of our common stock outstanding as of March 15, 2013. Information concerning any of the selling stockholders may change from time to time, and any changed information will be presented in a prospectus supplement as necessary. Please carefully read the footnotes located below the table in conjunction with the information presented in the table. Beneficially Owned Prior to Offering Beneficially Owned After Offering Selling Stockholder Name Number of Shares of Common Stock (1), (2) Percentage Shares of Common Stock that may be Offered and Sold Hereby (3) Number of Shares Percent Sabby Volatility Warrant Master Fund, Ltd. 2,500,000 6.1% 1,250,000(4) 0 0 Sabby Healthcare Volatility Master Fund, Ltd. 4,203,858 9.9% 5,000,000(5) 0 0 (1) Includes all shares beneficially owned by the selling stockholders as of March 15, 2013. (2) The Series A-1 Preferred Stock and the Warrants contain exercise and conversion limitations providing that a holder thereof may not convert or exercise (as the case may be) to the extent that, if after giving effect to such conversion or exercise (as the case may be), the holder or any of its affiliates would beneficially own in excess of 9.99% of the outstanding shares of common stock immediately after giving effect to such conversion or exercise (as the case may be). Accordingly, the number of shares of common stock set forth in the table as being registered for a selling stockholder exceeds the number of shares of common stock that the selling stockholder could own beneficially at any given time through its ownership of the Series A-1 Preferred Stock and the Warrants. (3) We have assumed (i) that each share of Series A-1 Preferred Stock is convertible into shares of common stock at a conversion price of $0.60 per share of common stock and (ii) that the Series B Warrants are exercisable at the initial exercise price, without adjustment. (4) Includes (i) 833,333 shares of common stock currently issuable upon conversion of the 500 shares of the Series A-1 Preferred Stock held by this selling stockholder and (ii) 416,667 shares currently issuable upon exercise of the Series B Warrant at $0.60 per share. The Series A-1 Preferred Stock and the Warrants contain exercise and conversion limitations providing that a holder thereof may not convert or exercise (as the case may be) to the extent that, if after giving effect to such conversion or exercise (as the case may be), the holder or any of its affiliates would beneficially own in excess of 9.99% of our outstanding shares of common stock immediately after giving effect to such conversion or exercise (as the case may be). However, the 9.99% limitation would not prevent a selling stockholder from acquiring and selling in excess of 9.99% of our common stock through a series of acquisitions and sales while never beneficially owning more than 9.99% in aggregate. Sabby Management, LLC shares voting and investment power with respect to these shares on behalf of this stockholder. As manager of Sabby Management, LLC, Hal Mintz also shares voting and investment power on behalf of this stockholder. Each of Sabby Management, LLC and Hal Mintz disclaim beneficial ownership over the securities covered by this prospectus except to the extent of their pecuniary interest therein. (5) Includes (i) 3,333,333 shares of common stock currently issuable upon conversion of the 2,000 shares of the Series A-1 Preferred Stock held by this selling stockholder and (ii) 1,666,667 shares currently issuable upon exercise of the Series B Warrant at $0.60 per share. The Series A-1 Preferred Stock and the Warrants contain exercise and conversion limitations providing that a holder thereof may not convert or exercise (as the case may be) to the extent that, if after giving effect to such conversion or exercise (as the case may be), the holder or any of its affiliates would beneficially own in excess of 9.99% of our outstanding shares of common stock immediately after giving effect to such conversion or exercise (as the case may be). However, the 9.99% limitation would not prevent a selling stockholder from acquiring and selling in excess of 9.99% of our common stock through a series of acquisitions and sales while never beneficially owning more than 9.99% in aggregate. Sabby Management, LLC shares voting and investment power with respect to these shares on behalf of this stockholder. As manager of Sabby Management, LLC, Hal Mintz also shares voting and investment power on behalf of this stockholder. Each of Sabby Management, LLC and Hal Mintz disclaim beneficial ownership over the securities covered by this prospectus except to the extent of their pecuniary interest therein. Use of Proceeds We will not receive any proceeds from the sale of common stock by the selling stockholders, but we will receive funds from the exercise of the Series B Warrants, if exercised. We have agreed to bear the expenses (other than any underwriting discounts or commissions or agent s commissions) in connection with the registration of the common stock being offered hereby by the selling stockholders. Dividend Policy We have not previously and do not plan to declare or pay any dividends on our common stock. Our current policy is to retain all funds and any earnings for use in the operation and expansion of our business. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including current financial condition, operating results and current and anticipated cash needs. In addition, the terms of the Series A-1 Preferred Stock prevent the payment of dividends on our common stock unless holders of at least 67% in stated value of the then-outstanding shares of Series A-1 Preferred Stock consent to such dividend. In the event we do declare a dividend, the holders of the Series A-1 Preferred Stock and Warrants will participate in such dividend payment on an as-converted basis to common stock (without regard to the 9.99% beneficial ownership limitation). Determination of Offering Price All shares of our common stock being offered will be sold by the selling stockholders without our involvement. As a result, the selling stockholders will determine at what prices they may sell the offered shares, and these sales may be made at prevailing market prices or at privately negotiated prices. Market for Common Equity and Related Stockholder Matters Our common stock is quoted on the OTC Bulletin Board under the symbol "XXII.OB." As of March 15, 2013, there were 63 holders of record of shares of our common stock. The following table sets forth, for the quarters indicated, the high and low bid prices per share of our common stock, as derived from quotations provided by the OTC Bulletin Board Information Center. Quarter Ended High Bid Low Bid December 31, 2012 $0.95 $0.15 September 30, 2012 $0.88 $0.20 June 30, 2012 $1.13 $0.35 March 31, 2012 $0.75 $0.25 December 31, 2011 $1.34 $0.25 September 30, 2011 $1.30 $0.60 June 30, 2011 $1.30 $1.10 March 31, 2011* $1.41 $1.01 *From January 25, 2011, the date of the Merger. Trades in our common stock may be subject to Rule 15g-9 of the Exchange Act, which imposes requirements on broker/dealers who sell securities subject to the rule to persons other than established customers and accredited investors. For transactions covered by the rule, broker/dealers must make a special suitability determination for purchasers of the securities and receive the purchaser s written agreement to the transaction before the sale. The SEC also has rules that regulate broker/dealer practices in connection with transactions in "penny stocks." Penny stocks generally are equity securities with a price of less than $5.00 (other than securities listed on some national exchanges, provided that the current price and volume information with respect to transactions in that security is provided by the applicable exchange or system). The penny stock rules require a broker/dealer, before effecting a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker/dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. The bid and offer quotations, and the broker/dealer and salesperson compensation information, must be given to the customer orally or in writing before effecting the transaction, and must be given to the customer in writing before or with the customer s confirmation. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for shares of common stock. As a result of these rules, investors may find it difficult to sell their shares. Shares Authorized for Issuance Under Equity Compensation Plans October 21, 2010, the Company established the 2010 Equity Incentive Plan, or "EIP," for officers, employees, directors, consultants and advisors to the Company and its affiliates, consisting of 4,250,000 shares of common stock. The EIP authorizes the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, restricted stock and restricted stock units. The following table summarizes the number of stock options issued and shares of restricted stock granted, net of forfeitures and sales, the weighted-average exercise price of such stock options and the number of securities remaining to be issued under all outstanding equity compensation plans as of December 31, 2012: Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Equity compensation plans approved by security holders 1,015,000(1) $0.69(2) 2,055,000 Equity compensation plans not approved by security holders 0 N/A 0 Total 1,015,000 2,055,000 (1) Includes 550,000 restricted stock awards that are issued but not vested as of December 31, 2012. (2) Weighted average exercise price only applies to the 465,000 shares issuable upon exercise of outstanding stock options. Business On January 25, 2011, 22nd Century Limited LLC completed a reverse merger transaction (the "Merger") with 22nd Century Group, Inc. 22nd Century Limited, LLC is a wholly owned subsidiary of 22nd Century Group, Inc. which continues to operate the business of 22nd Century Limited, LLC. All references to shareholders or common shares include the historical members and membership Units of 22nd Century Limited, LLC because, in the Merger, such Units were exchanged for common shares on a one-for-one basis and from an accounting standpoint, they are equivalent. The Merger is being accounted for as a reverse acquisition and a recapitalization; 22nd Century Limited, LLC is the acquirer for accounting purposes. Consequently, the assets and liabilities and the historical operations that are reflected in the financial statements prior to the Merger are those of 22nd Century Limited, LLC and are recorded at the historical cost basis of 22nd Century Limited, LLC, and the consolidated financial statements since completion of the Merger include the assets and liabilities of 22nd Century Limited, LLC, historical operations of 22nd Century Limited, LLC and operations of 22nd Century Group, Inc. from the closing date of the Merger. References to the "Company," "we," us" or "our" refer to the operations of 22nd Century Group, Inc. and its direct and indirect subsidiaries for the periods described herein. Background 22nd Century Group, Inc. was incorporated under the laws of the State of Nevada on September 12, 2005 under the name Touchstone Mining Limited. On January 25, 2011, we entered into a reverse merger transaction with 22nd Century Limited, LLC, which we refer to herein as the Merger. Upon the closing of the Merger, 22nd Century Limited, LLC became our wholly-owned subsidiary. We changed our name to 22nd Century Group, Inc. on November 23, 2010 in anticipation of the Merger with 22nd Century Limited, LLC. After the Merger, we succeeded to the business of 22nd Century Limited, LLC as our sole line of business. 22nd Century Limited, LLC was originally formed as a New York limited liability company on February 20, 1998 as 21st Century Limited, LLC and subsequently merged with a newly-formed Delaware limited liability company, 22nd Century Limited, LLC, on November 29, 1999. Since inception, 22nd Century Limited, LLC has used biotechnology to regulate the nicotine content in tobacco plants. Overview 22nd Century Limited, LLC ("22nd Century Ltd"), our wholly-owned subsidiary, is a plant biotechnology company focused on tobacco harm reduction and smoking cessation products produced from modifying the nicotine content in tobacco plants through genetic engineering and plant breeding. The Company exclusively controls 107 issued patents and exclusively controls an additional 39 patent applications; of these, we own 12 issued patents plus 22 patent applications and we license on an exclusive basis, 95 issued patents and 17 patent applications. Hercules Pharmaceuticals LLC ("Hercules Pharmaceuticals") and Goodrich Tobacco Company, LLC ("Goodrich Tobacco") are wholly-owned subsidiaries of 22nd Century Ltd. Hercules Pharmaceuticals is focused on X-22, a prescription smoking cessation aid currently in development. Goodrich Tobacco is focused on commercial tobacco products and potential modified risk cigarettes. The Company is primarily involved in the following activities: The international licensing of 22nd Century Ltd s technology, proprietary tobaccos, trademarks and brands; The development of its X-22 prescription smoking cessation aid in development; The development of its modified risk tobacco products; The pursuit of necessary regulatory approvals and clearances at the U.S. Food and Drug Administration (the "FDA") to market X-22 as a prescription smoking cessation aid and BRAND A and BRAND B as Modified Risk Cigarettes in the U.S.; The manufacture, marketing and distribution of RED SUN and MAGIC proprietary cigarettes; and The production of SPECTRUM research cigarettes for the National Institute on Drug Abuse ("NIDA"). Licensing The Company has been in discussions with various parties in the tobacco and pharmaceutical industries for licensing its technology and products since the first quarter of 2012. Management is exploring licensing arrangements on a country-by-country basis in the U.S., Europe and Asia. The Company expects to close at least one licensing agreement for its technology and products before the end of the third quarter of 2013. X-22 The X-22 therapy protocol utilized in the Company s sponsored Phase II-B clinical trial calls for the patient to smoke our very low nicotine ("VLN") cigarettes over a six-week treatment period to facilitate the goal of the patient quitting smoking by the end of the treatment period. We believe this therapy protocol has been successful in independent clinical trials because VLN cigarettes made from our proprietary tobacco satisfy smokers cravings for cigarettes while (i) greatly reducing nicotine exposure and nicotine dependence and (ii) extinguishing the association between the act of smoking and the rapid delivery of nicotine. X-22 involves the same smoking behavior as conventional cigarettes and because patients are simply switching to VLN cigarettes for 6 weeks, X-22 does not expose the smoker to any new drugs or new side effects. Our Investigational New Drug Application for X-22, a kit of VLN cigarettes, was cleared by the FDA in July 2011. Our X-22 Phase II-B clinical trial was completed in the first quarter of 2012 and did not demonstrate a statistically significant difference in quitting between X-22 and the active control, a cigarette containing conventional nicotine levels. However, the median number of X-22 cigarettes smoked during the trial was significantly reduced compared to patients baseline of usual brand of cigarettes. In evaluating the results of this trial, we believe we may have reduced the nicotine content of X-22 by too great a percentage, to a level less than half the nicotine content of VLN cigarettes used in various independent smoking-cessation clinical trials that have demonstrated that use of VLN cigarettes increases quit rates. In contrast to the results of the Company s Phase II-B trial results, independent studies have demonstrated that VLN cigarettes, whether used alone or in conjunction with nicotine replacement therapy (NRT), increase quitting rates. Due to the limited effectiveness and/or serious side effects of existing FDA-approved smoking cessation products, we believe that if additional clinical trials demonstrate increased smoking cessation rates, X-22 can capture a share of this market by replacing sales and market share from existing smoking cessation aids and expanding the smoking cessation market by encouraging more smokers to attempt to quit smoking. We are currently in the process of identifying potential joint venture partners to fund the remaining X-22 clinical trials. We estimate the cost of completing the remaining X-22 clinical trials to be approximately $14 million and the marketing expenses to bring X-22 to market in the U.S. are estimated to be approximately $5 million. There is no guarantee that we will (i) obtain the funds necessary to complete additional clinical trials, (ii) identify potential joint venture partners to fund the remaining X-22 clinical trials, (iii) obtain FDA approval, or (iv) capture significant share of the smoking cessation market upon FDA approval. We continue to believe that our VLN cigarettes are effective as a smoking cessation aid. However, we have suspended sponsoring further X-22 clinical trials pending a complete analysis of results of two independent smoking-cessation trials that were completed in 2012 (ClinicalTrials.gov Identifiers NCT01050569 and NCT01250301), which utilized a different version of our VLN cigarette with a nicotine content similar to those used in previous successful smoking-cessation trials and higher than that used in our own sponsored Phase II-B trial. A portion of the results of these two trials has been disclosed at the annual meeting of the Society for Research on Nicotine and Tobacco ("SRNT") held in Boston on March 13 to 16, 2013. Regarding the NCT01050569 clinical trial, results only in terms of gender differences in abstinence rates were disclosed at the SRNT annual meeting. Dorothy Hatsukami, PhD, was principal investigator of the study. Within the female population at the end of treatment (week 12), the group assigned our VLN cigarette had the highest continuous abstinence rate; the group assigned concurrent use of our VLN cigarette with a 21mg nicotine patch had the next highest continuous abstinence rate followed by the group assigned a 21mg nicotine patch. Within the male population at the end of treatment (week 12), the group assigned a 21mg nicotine patch had the highest continuous abstinence rate; the group assigned concurrent use of our VLN cigarette with a 21mg nicotine patch had the next highest continuous abstinence rate followed by the group assigned our VLN cigarette. Regarding the NCT01250301 clinical trial, certain results were disclosed in a presentation at the SRNT annual meeting given by Hayden McRobbie, Ph.D. of Queen Mary University of London, Wolfson Institute of Preventative Medicine, who was the principal investigator of the study. Pfizer Inc. was also a collaborator of the study. This clinical trial evaluated whether the use of our VLN cigarette in combination with Chantix or in combination with nicotine replacement therapy ("NRT") increases abstinence rates over the use of Chantix or the use of NRT. The study included one hundred smokers who were prescribed varenicline (trademarked Chantix, or Champix outside the U.S.) and one hundred smokers who were prescribed NRT. Half the smokers of each of these groups were randomly selected to also use our VLN cigarettes for the first 2 weeks of treatment. All smokers received 9 weekly behavioral support sessions throughout the 12-week study period. The group that used our VLN cigarettes had a 70% quit rate one week after stopping VLN cigarette use compared to a 53% quit rate of the group not using VLN cigarettes after week 1 (p=0.02). The group that used our VLN cigarettes had a 64% four-week continuous abstinence rate during weeks 3 to 6 compared to a 50% four-week continuous abstinence rate during weeks 1 to 4 (p=0.06). Quit rates at 12 weeks post treatment were not reported in the presentation. The full set of results of these 2 independent clinical trials are expected to be published in peer reviewed journals and will be compared to results of other independent clinical trials of our VLN cigarettes and results of our Phase II-B trial to determine which variables optimize cessation. One preliminary hypothesis, in conjunction with results of various other studies of our VLN cigarettes, is that having two types of prescription VLN cigarettes available may be advantageous for increased smoking cessation in the general population; one having a higher nicotine content than the other. Upon identifying a suitable joint venture partner to fund further X-22 clinical trials, we will then request a meeting with the U.S. Food and Drug Administration ("FDA"), and thereafter we may resume our own sponsored X-22 clinical trials. Potential Modified Risk Cigarettes and the Tobacco Control Act The 2009 Family Smoking Prevention and Tobacco Control Act ("Tobacco Control Act") granted the FDA authority over the regulation of all tobacco products. While it prohibits the FDA from banning cigarettes outright, it allows the FDA to require the reduction of nicotine or any other compound in tobacco and cigarette smoke. The Tobacco Control Act also banned all sales in the U.S. of cigarettes with characterizing flavors (other than menthol). As of June 2010, all cigarette companies were required to cease the use of the terms "low tar," "light" and "ultra light" in describing cigarettes sold in the U.S. Besides numerous other regulations, including certain marketing restrictions, for the first time in history, a U.S. regulatory agency will scientifically evaluate cigarettes that may pose lower health risks as compared to conventional cigarettes. The Tobacco Control Act establishes procedures for the FDA to regulate the labeling and marketing of modified risk tobacco products, which includes cigarettes that (i) reduce exposure to tobacco toxins and (ii) are reasonably likely to pose lower health risks as compared to conventional cigarettes ("Modified Risk Cigarettes"). The Tobacco Control Act requires the FDA to issue specific regulations or guidance regarding applications that must be submitted to the FDA for the authorization to label and market Modified Risk Cigarettes. On March 30, 2012, the FDA issued Modified Risk Tobacco Product Applications Draft Guidance. We believe that two types of our cigarettes in development which we refer to as BRAND A and BRAND B, may qualify as Modified Risk Cigarettes. Compared to commercial cigarettes, the tobacco in BRAND A has approximately 95% less nicotine than tobacco in cigarettes previously marketed as "light" cigarettes, and BRAND B s smoke contains an extraordinary low amount of "tar" per milligram of nicotine. Goodrich Tobacco intends to seek FDA authorization to market BRAND A and BRAND B as Modified Risk Cigarettes and expect to file applications with the FDA in 2013, the exact timing will depend on the timing of obtaining additional capital. After filing our modified risk applications with the FDA, we will need significant additional capital to complete the FDA authorization process for our Modified Risk Cigarettes. The exact amount of capital is currently unknown since it is uncertain how many exposure studies the FDA will require for BRAND A and BRAND B. However, we estimate that the cost of completing the FDA authorization process for each of our potential Modified Risk Cigarettes to be at least $2 million. We believe that BRAND A and BRAND B will achieve market share in the global cigarette market among smokers who will not quit but are interested in reducing the harmful effects of smoking. There is no guarantee that we will (i) obtain additional capital to complete the FDA authorization process for our potential Modified Risk Cigarettes, (ii) obtain FDA authorization to market BRAND A or BRAND B as Modified Risk Cigarettes, or (iii) achieve significant market with FDA authorization to market our products as Modified Risk Cigarettes. Within our two product categories, the Tobacco Control Act offers us the following specific advantages: Smoking Cessation Aids FDA approval must be obtained, as has been the case for decades, before a product can be marketed for quitting smoking. The Tobacco Control Act provides that products for quitting smoking or smoking cessation, such as X-22, be considered for "Fast Track" designation by the FDA. The "Fast Track" programs of the FDA are intended to facilitate development and expedite review of drugs to treat serious and life-threatening conditions so that an approved product can reach the market expeditiously. Although X-22 has failed previously to qualify for "Fast Track," we believe that upon completion of a company-sponsored clinical trial demonstrating efficacy, X-22 will qualify for "Fast Track" designation by the FDA. However, there is no guarantee that the FDA will grant "Fast Track" designation to X-22. See "Business – Government Regulation – Fast Track Development." Modified Risk Cigarettes We believe this new regulatory environment represents a paradigm shift for the tobacco industry. Besides the fact that the Tobacco Control Act establishes procedures for the FDA to regulate the labeling and marketing of modified risk tobacco products, the Tobacco Control Act allows the FDA to mandate the use of reduced-risk technologies across all conventional tobacco products or cigarettes. We believe the Tobacco Control Act may create opportunities for us to license our proprietary technology and/or tobaccos to larger competitors. Tar, Nicotine, and Smoking Behavior The dependence of many smokers on tobacco is largely due to the properties of nicotine, but the adverse effects of smoking on health are mainly due to other components present in tobacco smoke, including "tar" and carbon monoxide. "Tar" is the common name for the (resinous) total particulate matter minus nicotine and water produced by the burning of tobacco (or other plant material) during the act of smoking. "Tar" and nicotine are commonly measured in milligrams per cigarette trapped on a Cambridge filter pad under standardized conditions using smoking machines. These results are referred to as "yields" or, more specifically, "tar" yield and nicotine yield. Individual smokers generally seek a certain amount of nicotine per cigarette and can easily adjust how intensely each cigarette is smoked to obtain a satisfactory amount of nicotine. Smoking of low yield ("light" or "ultra light") cigarettes compared to high yield ("full flavor") cigarettes often results in taking more puffs per cigarette, larger puffs and/or smoking more cigarettes per day to obtain a satisfactory amount of nicotine, a phenomenon known as "compensation" or "compensatory smoking." A report by the National Cancer Institute in 2001 stated that due to compensatory smoking, low yield cigarettes are not safer than full flavor cigarettes, which is the reason that the Tobacco Control Act has banned the use of the terms "low tar," "light" and "ultra light" in the U.S. market. Studies have shown, however, that smokers generally do not compensate when smoking cigarettes made with our VLN tobacco, and that smoking VLN cigarettes, such as BRAND A, actually assist smokers to smoke fewer cigarettes per day and reduce their exposure to "tar" and nicotine. Other studies have demonstrated that compensatory smoking (e.g., more and/or larger puffs per cigarette) of low-tar research cigarettes, similar to BRAND B (though BRAND B was not used in such studies), is greatly curtailed resulting in smokers inhaling less "tar" and carbon monoxide. Additional studies will be necessary to establish whether BRAND B cigarettes achieve similar results. RED SUN and MAGIC Cigarettes Goodrich Tobacco has thus far had its cigarette brands contract manufactured by a non-participating manufacturer to the "Master Settlement Agreement" or "MSA," a settlement among 46 states and the tobacco industry administered by the National Association of Attorneys General ("NAAG"). Our subsidiary, Goodrich Tobacco, introduced in a limited capacity two super-premium priced cigarette brands, RED SUN and MAGIC, into the U.S. market in the first quarter 2011. There have been de minimis sales of these brands in 2011 and 2012 since we have intentionally have not expanded marketing and distribution of these brands to facilitate Goodrich Tobacco becoming a participating manufacturer of the MSA. The more RED SUN and MAGIC sold while these brands are produced by a non-participating manufacturer, the greater the settlement costs Goodrich Tobacco likely has to pay to become a participating manufacturer of the MSA. On January 23, 2013, Goodrich Tobacco applied to the Alcohol and Tobacco Tax Trade Bureau ("TTB") for a federal permit to manufacture its own tobacco products. Being a federally licensed tobacco product manufacturer is a primary requirement of becoming a participating manufacturer of the MSA. On February 26, 2013, Goodrich Tobacco applied to the NAAG to become a participating manufacturer to the MSA. Both of these measures, if approved by the TTB and NAAG, will greatly facilitate the sales and distribution potential of RED SUN and MAGIC. Goodrich Tobacco expects its cigarette factory startup costs to be approximately $250,000 and plans to lease a portion of the machinery required. The costs associated with the MSA settlement are expected to be less than $40,000. SPECTRUM Government Research Cigarettes As a subcontractor to RTI International ("RTI") in RTI s contract with The National Institute on Drug Abuse for the Research Cigarette Option, we supply modified nicotine (from very low to high) cigarettes to NIDA. These research cigarettes are distributed under the mark SPECTRUM. Market Cigarettes and Smoking Cessation Aids Our products address unmet needs of smokers; for those who want to quit, an innovative smoking cessation aid, and for those who do not quit, cigarettes that can reduce the level of exposure to tobacco toxins. According to the U.S. Center for Disease Control (CDC), the U.S. cigarette market consists of approximately 45 million adult smokers who spent approximately $80 billion in 2011 on approximately 300 billion cigarettes. Worldwide manufacturer sales in 2011 were over 5.0 trillion cigarettes, resulting in annual retail sales of approximately $610 billion. In 2010, annual manufacturer sales of smoking cessation aids in the U.S., all of which must be approved by the FDA, were approximately $1.0 billion. Outside the United States, the smoking cessation market is in its infancy and is approximately $3.0 billion. Approximately 50% of U.S. smokers attempt to quit smoking each year, but only 2% to 5% actually quit smoking in a given year. It takes smokers an average of 8 to 11 "quit attempts" before achieving long-term success. Approximately 95% of "self-quitters" (i.e., those who attempt to quit smoking without any treatment) relapse and resume smoking. The Institute of Medicine, the health arm of the National Academy of Sciences, in a 2007 report concludes: "There is an enormous opportunity to increase population prevalence of smoking cessation by reaching and motivating the 57 percent of smokers who currently make no quit attempt per year." We believe that our X-22 smoking cessation aid will be attractive to smokers who have been frustrated in their previous attempts to quit smoking using other therapies. Use of existing smoking cessation aids results in relapse rates that can be as high as 90% in the first year after a smoker initially "quits." Smokers currently have the following limited choices of FDA-approved products to help them quit smoking: varenicline (Chantix /Champix outside the U.S.), manufactured by Pfizer, bupropion (Zyban ), manufactured by GlaxoSmithKline, and nicotine replacement therapy, or "NRT," which is available in the U.S. in several forms: gums, patches, nasal sprays, inhalers and lozenges. Chantix and Zyban are pills and are nicotine free. Chantix , Zyban , the nicotine nasal spray and the nicotine inhaler are available by prescription only. Nicotine gums, nicotine patches, and lozenges are available over-the-counter. Chantix was introduced in the U.S. market in the fourth quarter 2006. Since 2007, Chantix has been the best-selling smoking cessation aid in the United States, with sales, according to Pfizer Inc., of $701 million in 2007, $489 million in 2008, $386 million in 2009, $330 million in 2010 and $326 million in 2011. In July 2009, the FDA required a "Boxed Warning," the most serious type of warning in prescription drug labeling, for both Chantix and Zyban based on the potential side effects of these drugs. Despite this Boxed Warning, worldwide sales of Chantix in 2009 to 2011 were approximately $700 million, $755 million, and $720 million, respectively. Other than Chantix and Zyban , the only FDA-approved smoking cessation therapy in the United States is NRT. These products consist of gums, patches, nasal sprays, inhalers and lozenges. Nicotine gums and nicotine patches have been sold in the U.S. for approximately 28 years and 20 years, respectively, and millions of smokers have already tried NRT products and failed to stop smoking due to the limited effectiveness of these products. According to Perrigo Company, a pharmaceutical company that sells NRT products, retail sales of NRT products in the United States were $800 million in the fiscal year ended June 30, 2012. Modified Risk Tobacco Products A substantial number of adult smokers are unable or unwilling to quit smoking. For example, each year one-half of the adult smokers in the United States do not attempt to quit. Nevertheless, we believe the majority of these smokers are interested in reducing the harmful effects of smoking. In a 2005 analyst report, The Third Innovation, Potentially Reduced Exposure Cigarettes, JP Morgan examined the effects of FDA regulation of tobacco, including the market for safer cigarettes. JP Morgan s proprietary survey of over 600 smokers found that 90% of smokers are willing to try a safer cigarette. Among JP Morgan s other conclusions, it stated: "FDA oversight would imbue PREPS [, ' ': potential reduced exposure products which essentially equate to potential modified risk tobacco products] with a regulatory , ' ': stamp of approval and allow for more explicit comparative health claims with conventional cigarettes. Consumers should trust the FDA more than industry health claims." Prior to the Tobacco Control Act becoming law in 2009, no regulatory agency or body had the authority to assess potential modified risk tobacco products. Some major cigarette manufacturers have developed and marketed alternative cigarette products. For example, Philip Morris USA developed an alternative cigarette, called Accord , in which the tobacco is heated rather than burned. R.J. Reynolds Tobacco Company has developed and is marketing an alternative cigarette, called Eclipse , in which the tobacco is primarily heated, with only a small amount of tobacco burned. Philip Morris and RJ Reynolds have indicated that their products may deliver fewer smoke components compared to conventional cigarettes. Vector Tobacco Inc. ("Vector Tobacco"), which is our former licensee, has marketed a cigarette offered in three brand styles with reduced levels of nicotine, called Quest . Both Accord and Eclipse , which are not conventional cigarettes (e.g., referred to as "heat not burn" products since they do not burn down) and have only achieved limited sales. With the exception of Eclipse , the above products are no longer being manufactured. Complete cessation from all tobacco and medicinal nicotine products is the ultimate goal of the public health community. However, some public health officials desire to migrate cigarette smokers en masse to medicinal nicotine (also known as NRT) or smokeless tobacco products to replace cigarettes. We believe this is unattainable in the foreseeable future for many reasons, including because the smoking experience is much more complex than simply seeking nicotine. In a 2009 WHO report, statistics demonstrate that approximately 90% of global tobacco users smoke cigarettes. Worldwide cigarette sales (in U.S. dollars) are approximately 12 times greater than sales of smokeless tobacco products and approximately 200 times greater than sales of NRT products. Although a small segment of the smoking population is willing to use smokeless tobacco products in conjunction with cigarettes (known as dual users), a large percentage of smokers is not interested in using smokeless tobacco products exclusively. There are newer forms of smokeless tobacco products that have been introduced in the market that are less messy to use than chewing tobacco or dry snuff (since spitting is not involved). These products include Swedish-style snus and dissolvable tobacco products such as Ariva and Stonewall tablets made by Star Scientific Inc., and Camel Orbs, Camel Strips and Camel Sticks recently introduced by R.J. Reynolds Tobacco Company. Although use of such products may be more discreet and convenient than traditional forms of smokeless tobacco, they have the same route of delivery of nicotine as nicotine gum and nicotine lozenges, which have been available over-the-counter in the United States for approximately 28 years and 10 years, respectively, and have not significantly replaced cigarettes. Products X-22 Smoking Cessation Aid X-22 is a tobacco-based botanical medical product for use as a smoking cessation therapy. Upon U.S. Food and Drug Administration ("FDA") approval, X-22 will be a prescription-only kit containing VLN cigarettes made from our proprietary tobacco, which has approximately 95% less nicotine compared to tobacco in existing "light" cigarettes. The X-22 therapy protocol calls for the patient to smoke our VLN cigarettes over a six-week treatment period to facilitate the goal of the patient quitting smoking by the end of the treatment period. We believe this therapy protocol has been successful in independent clinical trials because VLN cigarettes made from our proprietary tobacco satisfy smokers cravings for cigarettes while (i) greatly reducing nicotine exposure and nicotine dependence and (ii) extinguishing the association between the act of smoking and the rapid delivery of nicotine. Our Investigational New Drug Application for X-22, a kit of very low nicotine ("VLN") cigarettes, was cleared by the FDA in July 2011. Our X-22 Phase II-B clinical trial was completed in the first quarter of 2012 and did not demonstrate a statistically significant difference in quitting between X-22 and the active control, a cigarette containing conventional nicotine levels. In evaluating the results of this trial, we believe we may have reduced the nicotine content of X-22 by too great a percentage,to a level less than half the nicotine content of VLN cigarettes used in various independent smoking-cessation clinical trials that have demonstrated that use of VLN cigarettes increases quit rates. Partial results of two independent smoking-cessation clinical trials that were completed in 2012 (ClinicalTrials.gov Identifiers NCT01050569 and NCT01250301) have been disclosed at the annual meeting of the Society for Research on Nicotine and Tobacco ("SRNT") held in Boston on March 13 to 16, 2013. 1.University of Minnesota Masonic Cancer Center - Phase II - 235 subjects Follow-up study to Hatsukami et al. 2010 ClinicalTrials.gov Identifier: NCT01050569 Evaluating quitting results of six-week treatment period among 3 groups: (i) exclusive use of a VLN cigarette (a VLN cigarette with slightly higher nicotine content than those used in the 22nd Century trial); (ii) 21-mg nicotine patch; and (iii) concurrent use of VLN cigarette and nicotine patch Trial included a 6-month follow-up period 2.Queen Mary University of London, in collaboration with Pfizer - 200 subjects Same VLN cigarette utilized in above study ClinicalTrials.gov Identifier: NCT01250301 Evaluating whether the use of a VLN cigarette in combination with Chantix (or NRT) increases quitting over use of Chantix (or NRT) alone Chantix is branded as Champix outside the United States Regarding the NCT01050569 clinical trial, results only in terms of gender differences in abstinence rates were disclosed at the SRNT annual meeting. Dorothy Hatsukami, PhD, was principal investigator of the study. Smokers were randomly assigned (n=235) to one of three treatment groups: (i) our VLN cigarette (n=79); (ii) a 21 mg nicotine patch (n=80) or (iii) a combination of the 21 mg nicotine patch and our VLN cigarette (n=76). Each group received 6 weeks of treatment, an additional 6 weeks of behavioral treatment and 3 follow-up visits. Tobacco and nicotine use self-report and carbon monoxide (CO) were assessed at each visit. Urinary cotinine was assessed at baseline and at weeks 2, 6, 12, 24 and 36. CO and cotinine verified continuous abstinence rates at end of treatment (week 12) varied significantly by treatment group and gender (p=0.029 for the interaction). Within the female population at the end of treatment (week 12), the group assigned our VLN cigarette had the highest continuous abstinence rate; the group assigned concurrent use of our VLN cigarette with a 21mg nicotine patch had the next highest continuous abstinence rate followed by the group assigned a 21mg nicotine patch. Within the male population at the end of treatment (week 12), the group assigned a 21mg nicotine patch had the highest continuous abstinence rate; the group assigned concurrent use of our VLN cigarette with a 21mg nicotine patch had the next highest continuous abstinence rate followed by the group assigned our VLN cigarette. Regarding the NCT01250301 clinical trial, certain results were disclosed in a presentation at the SRNT annual meeting given by Hayden McRobbie, Ph.D. of Queen Mary University of London, Wolfson Institute of Preventative Medicine, who was the principal investigator of the study. Pfizer Inc. was also a collaborator of the study. This clinical trial evaluated whether the use of our VLN cigarette in combination with Chantix or in combination with nicotine replacement therapy ("NRT") increases abstinence rates over the use of Chantix or the use of NRT. The study included one hundred smokers who were prescribed varenicline (trademarked Chantix, or Champix outside the U.S.) and one hundred smokers who were prescribed NRT. Half the smokers of each of these groups were randomly selected to also use our VLN cigarettes for the first 2 weeks of treatment. All smokers received 9 weekly behavioral support sessions throughout the 12-week study period. The group that used our VLN cigarettes had a 70% quit rate one week after stopping VLN cigarette use compared to a 53% quit rate of the group not using VLN cigarettes after week 1 (p=0.02). The group that used our VLN cigarettes had a 64% four-week continuous abstinence rate during weeks 3 to 6 compared to a 50% four-week continuous abstinence rate during weeks 1 to 4 (p=0.06). Quit rates at 12 weeks post treatment were not reported in the presentation. The full set of results of these 2 independent clinical trials are expected to be published in peer reviewed journals and will be compared to results of other independent clinical trials of our VLN cigarettes and results of our Phase II-B trial to determine which variables optimize cessation. One preliminary hypothesis, in conjunction with results of various other studies of our VLN cigarettes, is that having two types of prescription VLN cigarettes available may be advantageous for increased smoking cessation in the general population; one having a higher nicotine content than the other. Upon identifying a suitable joint venture partner to fund further X-22 clinical trials, we will then request a meeting with the U.S. Food and Drug Administration ("FDA"), and thereafter we may resume our own sponsored X-22 clinical trials. RED SUN and MAGIC Cigarettes Our subsidiary, Goodrich Tobacco, introduced two super-premium priced cigarette brands, RED SUN and MAGIC, into the U.S. market in the first quarter 2011. Both brands are available in regular and menthol and all brand styles are king size and packaged in hinge-lid hard packs. In the second quarter of 2013, we intend to focus our marketing efforts on tobacconists, smoke shops and tobacco outlets in the U.S. The ban in 2009 by the FDA of all cigarettes with characterizing flavors (with the exception of menthol) has resulted in a product void in these specialty tobacco channels for super-premium priced products. We believe that certain U.S. cigarette wholesalers and retailers will carry our brands, among other reasons, to increase their margins. SPECTRUM Government Research Cigarettes As a subcontractor to RTI International ("RTI") in RTI s contract with The National Institute on Drug Abuse for the Research Cigarette Option, we supply modified nicotine (from very low to high) cigarettes to NIDA. These research cigarettes are distributed under the mark SPECTRUM. Our Modified Risk Cigarettes We believe that our BRAND A and BRAND B cigarettes will benefit smokers who are unable or unwilling to quit smoking and who may be interested in cigarettes which reduce exposure to certain tobacco smoke toxins and/or pose a lower health risk than conventional cigarettes. This includes the approximate one-half of the 45 million adult smokers in the United States who do not attempt to quit in a given year. Compared to commercial cigarettes, the tobacco in BRAND A has approximately 95% less nicotine than tobacco in cigarettes previously marketed as "light" cigarettes and BRAND B s smoke contains an extraordinary low amount of "tar" per milligram of nicotine. We believe that BRAND A and BRAND B will qualify as Modified Risk Cigarettes and we intend to seek FDA authorization to market BRAND A and BRAND B as Modified Risk Cigarettes. On March 30, 2012, the FDA issued Modified Risk Tobacco Product Applications Draft Guidance, which we will utilize to file our two modified risk applications with the FDA. Goodrich Tobacco intends to seek FDA authorization to market BRAND A and BRAND B as Modified Risk Cigarettes and expect to file applications with the FDA in 2013, the exact timing will depend on the timing of obtaining additional capital. After filing our modified risk applications with the FDA, we will need significant additional capital to complete the FDA authorization process for our Modified Risk Cigarettes. The exact amount of capital is currently unknown since it is uncertain how many exposure studies the FDA will require for BRAND A and BRAND B. However, we estimate that the cost of completing the FDA authorization process for each of our potential Modified Risk Cigarettes to be at least $2 million. We believe that BRAND A and BRAND B will achieve market share in the global cigarette market among smokers who will not quit but are interested in reducing the harmful effects of smoking. There is no guarantee that we will (i) obtain additional capital to complete the FDA authorization process for our potential Modified Risk Cigarettes, (ii) obtain FDA authorization to market BRAND A or BRAND B as Modified Risk Cigarettes, or (iii) achieve significant market with FDA authorization to market our products as Modified Risk Cigarettes. BRAND A Cigarettes Compared to commercial tobacco cigarettes, BRAND A has the lowest nicotine content. The tobacco in BRAND A contains approximately 95% less nicotine than tobacco in leading "light" cigarette brands. Clinical studies have demonstrated that smokers who smoke VLN cigarettes containing our proprietary tobacco smoke fewer cigarettes per day resulting in significant reductions in smoke exposure, including "tar," nicotine and carbon monoxide. Due to the very low nicotine levels, compensatory smoking does not occur with VLN cigarettes containing our proprietary tobacco (Hatsukami et al. 2010). In a June 16, 2010 press release, Dr. David Kessler, the former FDA Commissioner, recommended that "[t]he FDA should quickly move to reduce nicotine levels in cigarettes to non-addictive levels. If we reduce the level of the stimulus, we reduce the craving. It is the ultimate harm reduction strategy." Shortly thereafter in a Washington Post article, Dr. Kessler said that the amount of nicotine in a cigarette should drop from about 10 milligrams to less than 1 milligram. BRAND A contains approximately 0.7 milligram of nicotine per cigarette. A Phase II smoking cessation clinical trial at the University of Minnesota Masonic Comprehensive Cancer Center (Hatsukami et al. 2010) also measured exposure of various smoke compounds in smokers from smoking a VLN cigarette containing our proprietary tobacco over a six (6)-week period. Smokers significantly reduced their smoking as compared to their usual brand of cigarettes. The number of VLN cigarettes smoked per day on average decreased from 19 (the baseline number of cigarettes of smokers usual brand) to 12 by the end of the six (6)-week period, even though participants were instructed to smoke ad libitum (as many cigarettes as desired) during treatment. Furthermore, besides significant reductions in other biomarkers, carbon monoxide (CO) levels, an indicator of smoke exposure, significantly decreased from 20 parts per million (baseline) to 15 parts per million. Cotinine, a metabolite and biomarker of nicotine, significantly decreased from 4.2 micrograms/mL (baseline) to 0.2 micrograms/mL. All differences were statistically significant (P<0.05). We believe these and other results and future exposure studies the FDA may require will result in a modified risk cigarette claim for BRAND A. We further believe smokers who desire to smoke fewer cigarettes per day while also satisfying cravings and reducing exposure to nicotine will find BRAND A beneficial. There is no guarantee that BRAND A will be classified as a Modified Risk Cigarette by the FDA. BRAND B Cigarettes Using a proprietary high nicotine tobacco blend in conjunction with specialty cigarette components, BRAND B allows the smoker to achieve a satisfactory amount of nicotine per cigarette while inhaling less "tar" and carbon monoxide. At the same time, we do not expect exposure to nicotine from BRAND B to be significantly higher than some commercially available full flavor cigarette brands. We believe smokers who desire to reduce smoke exposure but are less concerned about nicotine will find BRAND B beneficial. BRAND B has a "tar" yield between typical "light" and "ultra-light" cigarettes, but a nicotine yield of typical full flavor cigarettes. In a 2001 report, entitled Clearing the Smoke, Assessing the Science Base for Tobacco Harm Reduction, the Institute of Medicine notes that a low "tar"/moderate nicotine cigarette is a viable strategy for reducing the harm caused by smoking. The report states: "Retaining nicotine at pleasurable or addictive levels while reducing the more toxic components of tobacco is another general strategy for harm reduction." We believe that evaluation of BRAND B in short-term human exposure studies will confirm that exposure to smoke, including certain tobacco smoke toxins and carbon monoxide, is significantly reduced when smoking BRAND B as compared to smoking the leading brands of cigarettes. We believe results from these exposure studies will warrant a modified risk claim for BRAND B. There is no guarantee that BRAND B will be classified as a Modified Risk Cigarette by the FDA. Smoking Cessation Clinical Trials with VLN Cigarettes Partial results of two independent smoking-cessation clinical trials that were completed in 2012 (ClinicalTrials.gov Identifiers NCT01050569 and NCT01250301) have been disclosed at the annual meeting of the Society for Research on Nicotine and Tobacco ("SRNT") held in Boston on March 13 to 16, 2013. Regarding the NCT01050569 clinical trial, results only in terms of gender differences in abstinence rates were disclosed at the SRNT annual meeting. Dorothy Hatsukami, PhD, was principal investigator of the study. Smokers were randomly assigned (n=235) to one of three treatment groups: (i) our VLN cigarette (n=79); (ii) a 21 mg nicotine patch (n=80) or (iii) a combination of the 21 mg nicotine patch and our VLN cigarette (n=76). Each group received 6 weeks of treatment, an additional 6 weeks of behavioral treatment and 3 follow-up visits. Tobacco and nicotine use self-report and carbon monoxide ("CO") were assessed at each visit. Urinary cotinine was assessed at baseline and at weeks 2, 6, 12, 24 and 36. CO and cotinine verified continuous abstinence rates at end of treatment (week 12) varied significantly by treatment group and gender (p=0.029 for the interaction). Within the female population at the end of treatment (week 12), the group assigned our VLN cigarette had the highest continuous abstinence rate; the group assigned concurrent use of our VLN cigarette with a 21mg nicotine patch had the next highest continuous abstinence rate followed by the group assigned a 21mg nicotine patch. Within the male population at the end of treatment (week 12), the group assigned a 21mg nicotine patch had the highest continuous abstinence rate; the group assigned concurrent use of our VLN cigarette with a 21mg nicotine patch had the next highest continuous abstinence rate followed by the group assigned our VLN cigarette. Regarding the NCT01250301 clinical trial, certain results were disclosed in a presentation at the SRNT annual meeting given by Hayden McRobbie, Ph.D. of Queen Mary University of London, Wolfson Institute of Preventative Medicine, who was the principal investigator of the study. Pfizer Inc. was also a collaborator of the study. This clinical trial evaluated whether the use of our VLN cigarette in combination with Chantix or in combination with nicotine replacement therapy ("NRT") increases abstinence rates over the use of Chantix or the use of NRT. The study included one hundred smokers who were prescribed varenicline (trademarked Chantix, or Champix outside the U.S.) and one hundred smokers who were prescribed NRT. Half the smokers of each of these groups were randomly selected to also use our VLN cigarettes for the first 2 weeks of treatment. All smokers received 9 weekly behavioral support sessions throughout the 12-week study period. The group that used our VLN cigarettes had a 70% quit rate one week after stopping VLN cigarette use compared to a 53% quit rate of the group not using VLN cigarettes after week 1 (p=0.02). The group that used our VLN cigarettes had a 64% four-week continuous abstinence rate during weeks 3 to 6 compared to a 50% four-week continuous abstinence rate during weeks 1 to 4 (p=0.06). Quit rates at 12 weeks post treatment were not reported in the presentation. Previous to the 2 clinical trials presented at the 2013 SRNT meeting, VLN cigarettes containing our proprietary tobacco have been the subject of various independent studies, including two Phase II clinical trials for smoking cessation which were not funded by us. Both of these Phase II clinical trials were "intent to treat" trials, meaning that any patients who dropped out of the trials for any reason at any time during treatment or during the follow-up periods were considered failures (still smoking and not abstinent). Dropout rates during smoking cessation trials are generally high since patients either quit smoking or resume smoking their usual brand. In either case, they may believe there is no reason to continue. One of these two Phase II clinical trials compared the quitting efficacy of a VLN cigarette containing our proprietary tobacco versus a low nicotine cigarette and an FDA-approved nicotine lozenge (4 mg) in a total of 165 patients treated for six (6) weeks (Hatsukami et al. 2010, Addiction 105:343–355). This clinical trial was led by Dr. Dorothy Hatsukami at the University of Minnesota Masonic Comprehensive Cancer Center. Dr. Hatsukami was selected in 2010 as one of the nine voting members of the 12-person Tobacco Products Scientific Advisory Committee ("TPSAC"), within the FDA s Center for Tobacco Products created under the Tobacco Control Act. (TPSAC will make recommendations and issue reports to the FDA Commissioner on tobacco regulatory matters, including but not limited to, the impact of the use of menthol in cigarettes, altering levels of nicotine in tobacco products, and applications submitted to the FDA for modified risk tobacco products.) Results from this Phase II trial conclude that patients exclusively using the VLN cigarette containing our proprietary tobacco achieved a 43% quit rate (confirmed four (4)-week continuous abstinence) as compared to a quit rate of 35% for the group exclusively using the FDA-approved nicotine lozenge and a 21% quit rate for the group exclusively using the low nicotine cigarette. Smoking abstinence at the 6-week follow-up after the end of treatment was 47% for the VLN cigarette group, 37% for the nicotine lozenge group and 23% for the low nicotine cigarette group. Furthermore, the VLN cigarette was also associated with greater relief from withdrawal symptoms and cravings of usual brand cigarettes than the nicotine lozenge. Carbon monoxide (CO) levels in patients were tested at each treatment clinic visit to verify smoking abstinence. Unlike Phase III clinical trials for other FDA-approved smoking cessation aids, four (4) week continuous abstinence in the University of Minnesota Phase II trial was measured after the treatment period, when patients were "off" medication, rather than during the last four weeks of the treatment period. For example, according to the prescription Chantix label, four (4)-week continuous abstinence in the Chantix Phase III clinical trials (the 44 percent quit rate advertised by Pfizer) was measured during the last four weeks of the 12-week treatment period, while patients were still taking Chantix . In one of these Chantix Phase III clinical trials, approximately one-third of those who had been abstinent during the last week of treatment returned to smoking within four weeks after they stopped taking Chantix , and approximately 45% returned to smoking within eight weeks after they stopped taking Chantix . Patients who used the VLN cigarette over the six (6)-week treatment period significantly reduced their smoking as compared to their usual brand of cigarettes. The number of VLN cigarettes smoked per day on average decreased from 19 (the baseline number of cigarettes of the smoker s usual brand) to 12 by the end of the six (6)-week treatment period, even though participants in this clinical trial were instructed to smoke ad libitum (as many cigarettes as desired) during treatment. Carbon monoxide (CO) levels, an indicator of smoke exposure, significantly decreased from 20 parts per million (baseline) to 15 parts per million. Cotinine, a metabolite and biomarker of nicotine, significantly decreased from 4.2 micrograms/mL (baseline) to 0.2 micrograms/mL. All differences in the above three measurements were statistically significant (P<0.05). In a separate Phase II clinical trial funded by Vector Tobacco, our former licensee, under Investigational New Drug ("IND") Application 69,185, a randomized double-blind, active controlled, parallel group, multi-center Phase II smoking cessation clinical trial was conducted to evaluate the quitting efficacy of Quest reduced-nicotine cigarettes as a smoking cessation treatment in 346 patients (Becker et al. 2008, Nicotine & Tobacco Research 10:1139-48). Treatment consisted of smoking three reduced-nicotine cigarette styles (Quest 1 , Quest 2 and Quest 3 ) for two (2) weeks each, with nicotine yields per cigarette of 0.6 mg (a low nicotine cigarette made with a blend of regular tobacco and our proprietary VLN tobacco), 0.3 mg (an extra low nicotine cigarette made with a blend of regular tobacco and our proprietary VLN tobacco) and 0.05 mg (a VLN cigarette made with tobacco only from our proprietary VLN tobacco variety) either in combination with nicotine patch therapy (a nicotine replacement therapy or NRT product) or placebo patches. In this three-arm clinical trial in which patients were treated over a period of sixteen (16) weeks, use of reduced-nicotine cigarettes in combination with nicotine patches was more effective (the difference was statistically significant) in achieving four (4)-week continuous abstinence than use of nicotine patches alone (32.8% vs. 21.9%), and use of reduced-nicotine cigarettes without nicotine patches yielded an abstinence rate similar (the difference was not statistically significant) to that of nicotine patches (16.4% vs. 21.9%). No serious adverse events were attributable to the investigational product. The major differences between the Vector Tobacco Phase II clinical trial and the University of Minnesota Phase II clinical trial is the duration of time during treatment that VLN cigarettes are smoked and the use of nicotine replacement therapy ("NRT ) in combination with VLN cigarettes. In the Vector Tobacco trial, VLN cigarettes were smoked by patients (in two arms of the study) for only two (2) weeks, either in combination with using a nicotine patch or placebo patch, followed by continued use of nicotine patches for the subsequent ten (10) weeks. In the University of Minnesota Phase II clinical trial, VLN cigarettes (in one arm of the study) were smoked for six (6) weeks without any use of NRT before, during or after this 6-week treatment period. We believe that the effectiveness of VLN cigarettes for use in smoking cessation is higher when they are used alone (without NRT or another therapy) and for a longer time period, as in the University of Minnesota trial. A 2008 binding arbitration award, which was completely fulfilled in 2009 by our former licensee, Vector Tobacco, provided us with copies of all of Vector Tobacco s FDA submissions relating to Vector Tobacco s IND for Quest and awarded to us a right of reference to Vector Tobacco s IND for Quest , including all results of Vector s Phase II clinical trial. This arbitration award allows us to use all such information in our IND with the FDA for our VLN cigarette that contains our same proprietary tobacco that Vector Tobacco used in its IND submissions to the FDA. This arbitration award has been helpful to us with the FDA, since analytical reports produced by Vector Tobacco pertaining to our proprietary tobacco and cigarettes made from our proprietary tobacco are being utilized by us with the FDA. A randomized controlled smoking cessation clinical trial using VLN cigarettes was a conducted at Roswell Park Cancer Institute, Buffalo, New York, to investigate the effect of smoking a very low nicotine cigarette ("VLN") in combination with a nicotine patch for 2 weeks prior to the quit date (Rezaishiraz et al. 2007 Nicotine & Tobacco Research 9:1139-1146). Ninety-eight adult smokers were randomized to two treatments: (i) two (2) weeks of a VLN (Quest 3 ) and 21-mg nicotine patch before the quit date and (ii) a reduced nicotine cigarette (Quest 1 ) during the two (2) weeks before the quit date. After the quit date, all subjects received counseling for smoking cessation and nicotine patch therapy for up to eight (8) weeks (four (4) weeks of 21-mg patches, two (2) weeks of 14-mg patches, and two (2) weeks of 7-mg patches). Group 1, which used the VLN cigarette and a nicotine patch before quitting, had lower combined craving scores during the two (2) weeks before and after the quit date. Self-reported point prevalence of smoking abstinence at the three (3)- and six (6)-month follow-up points was higher in Group 1 (43% vs. 34% and 28% vs. 21%). A Phase III/IV two-arm smoking-cessation clinical trial of 1,410 treatment-seeking smokers was conducted by the University of Auckland, Clinical Trials Research Unit (Walker et al. 2012 Addiction 107: 857–1867)). The 705 patients who received VLN cigarettes in addition to NRT (patches and/or gum or lozenges) had significantly higher cessation rates at all measured time points (3 weeks, 6 weeks, 3 months and 6 months) than patients treated only with NRT. For those who failed to quit, the median time to relapse was increased to two months in the VLN + NRT group, compared to 13 days in the NRT only group. There was no difference in the frequency of serious adverse events between the groups. A study at Dalhousie University, Halifax, Nova Scotia (Barrett 2010 Behavioural Pharmacology 21:144-52), compared the effects of low nicotine cigarettes and an FDA-approved nicotine inhaler on cravings and smoking behavior of smokers who did not intend to quit. In separate laboratory sessions, each of twenty-two (22) participants used a VLN cigarette (Quest 3 ), a reduced nicotine cigarette (Quest 1 , which contains approximately two-thirds conventional tobacco and one-third VLN tobacco), a nicotine inhaler (10 mg; 4 mg deliverable, Pharmacia), or a placebo inhaler (identical in appearance to the nicotine inhaler, but containing no nicotine). Cravings, withdrawal and mood descriptors were rated before and after a twenty (20)-minute treatment session during which subjects were instructed to smoke two cigarettes or to use an inhaler every 10 seconds. The reduction in the rating of intent to smoke (usual cigarette brand) after using the VLN cigarette (-10.0) was significantly greater than the reduction with the nicotine inhaler (-1.9). Use of the VLN cigarette was also associated with significantly increased satisfaction and relaxation compared to the nicotine inhaler. Technology Platform Our proprietary technology enables us to decrease or increase the level of nicotine (and other nicotinic alkaloids such as nornicotine, anatabine and anabasine) in tobacco plants by decreasing or increasing the expression of gene(s) responsible for nicotine production in the tobacco plant using genetic engineering. The basic techniques, include but are not limited to those that are used in the production of genetically modified (GM) varieties of other crops. However, our proprietary technology can also be implemented without the resulting plants being GM, as long as no foreign DNA not inherent to a plant species such as Nicotiana tabacum is present in the engineered plant. In 2009 GM crops were planted on 330 million acres in 25 countries according to the International Service for the Acquisition of Agri-Biotech Applications. This includes approximately 85% of the corn and soybeans grown in the United States. The only components of the technology that are distinct from those in commercialized genetically modified varieties of major crops are segments of tobacco genes (DNA sequences) that are also present in all conventional tobacco plants. Genetically modified or transgenic tobacco that we use in our products has been deregulated by the USDA. Thus, plants may be grown and used in products in the United States without legal restrictions or labeling requirements related to the genetic modification. Nevertheless, our proprietary tobacco is grown only by farmers under contracts that require segregation and prohibit transfer of material to other parties. During the development of genetically-engineered plant varieties, many candidate plant lines are evaluated in the field in multiple locations over several years, as in any other variety development program. This is carried out in order to identify lines that have not only the specific desired trait, e.g., very low nicotine, but have overall characteristics that are suitable for commercial production of the desired product. This process allows us to see if there are undesirable effects of the genetic modification approach or the specific genetic modification event, regardless of whether the effects are anticipated or unanticipated. For example, since nicotine is known to be an insecticide that is effective against a wide range of insects, reduction of nicotine content in the plants may be expected to affect susceptibility to insect pests. While there are differences in the susceptibility of VLN tobacco to some insects, all tobacco is attacked by a number of insects. The measures taken to control insect pests of conventional tobacco are adequate to control insect pests in VLN tobacco. Once a genetically-engineered tobacco plant with the desired characteristics is obtained, each plant can produce hundreds of thousands of seeds. When each seed is germinated, the resulting tobacco plant has characteristics similar to the parent and sibling plants and the nicotine content of these plants generally fall within a narrow range. Tobacco products with either low or high nicotine content are easily produced through this method. For example, one of our proprietary tobacco varieties contains the lowest nicotine content of any tobacco ever commercialized, with approximately 95% less nicotine than tobacco in leading "light" cigarette brands. This proprietary tobacco grows with virtually no nicotine without adversely affecting the other leaf constituents important to a cigarette s characteristics, including taste and aroma. Sources of Raw Materials We obtain a large portion of our tobacco leaf requirements from farmers in multiple U.S. states that are under direct contracts with us. The contracts prohibit the transfer of our proprietary seeds and plant materials to other parties. We purchase the balance of our tobacco requirements through third parties. As we expand our sales and distribution of our current commercial brands, RED SUN and MAGIC, and proceed to market with our X-22 smoking cessation aid and BRAND A and BRAND B cigarettes, we plan to continue to scale up the amount of tobacco leaf we obtain directly from farmers under contract. Intellectual Property Our proprietary technology is covered by 12 patent families consisting of 107 issued patents in 78 countries, (of these, we own 12 issued patents and we license 95 issued patents on an exclusive basis) and 39 pending patent applications (of these we own 22 patent applications and we license 17 patent applications on an exclusive basis). A "patent family" is a set of patents granted in various countries to protect a single invention. Our patent coverage in the United States and China, the two most valuable smoking cessation and cigarette markets in the word, consists of 15 issued patents and 9 pending applications and 6 issued patents and 3 pending patent applications, respectively. We have exclusive worldwide rights to all uses of the following genes responsible for nicotine content in tobacco plants: QPT, A622, NBB1, MPO and genes for several transcription factors. We have exclusive rights to plants with altered nicotine content produced from modifying expression of these genes and tobacco products produced from these plants. We also have the exclusive right to license and sublicense these patent rights. The patents owned by or exclusively licensed to us are issued in countries where at least 75% of the world s smokers reside. We own various registered trademarks in the United States. We also have exclusive rights to plant variety protection, or PVP, certificates in the United States (issued by the U.S. Department of Agriculture) and Canada. A PVP certificate prevents anyone other than the owner/licensee from planting, propagating, selling, importing and exporting a plant variety for twenty (20) years in the U.S. and generally for (20) years in other member countries of the International Union for the Protection of New Varieties of Plants, known as UPOV, an international treaty concerning plant breeders rights. There are currently more than 70 countries that are members of UPOV. Sales and Marketing X-22 Smoking Cessation Aid We are currently in the process of identifying potential joint venture partners to fund the remaining X-22 clinical trials. We can only market X-22 in the U.S. upon FDA approval. There is no guarantee that we will (i) obtain the funds necessary to complete additional clinical trials, (ii) identify potential joint venture partners to fund the remaining X-22 clinical trials, (iii) obtain FDA approval, or (iv) capture significant share of the smoking cessation market upon FDA approval. If the FDA approves X-22 as a smoking cessation aid, Hercules Pharmaceuticals, our subsidiary, intends to enter into arrangements in both the U.S. and international markets with pharmaceutical companies to market and sell X-22. We plan to seek marketing partners in the U.S. with existing pharmaceutical sales forces that already call on medical and dental offices in their geographic markets. We estimate the cost of completing the remaining X-22 clinical trials to be approximately $14 million and the marketing expenses to bring X-22 to market in the U.S. are estimated to be approximately $5 million. There are approximately 700,000 physicians in the U.S., including approximately 80,000 general practitioners, many of whom are aware of new medications, even before they achieve FDA approval. There are also approximately 170,000 dentists in the U.S. who can write prescriptions for smoking cessation aids. Upon FDA approval, we plan to develop awareness for X-22 by educating physicians and dentists about our X-22 smoking cessation aid. We intend to advertise in professional journals, use direct mail campaigns to medical professionals, and attend trade shows and professional conferences. We also intend to use internet advertising and pharmacy circulars to reach consumers and to encourage them to ask their physicians and dentists about our X-22 smoking cessation aid. We expect to use public relations to increase public awareness about X-22. We will seek to use federal and state-funded smoking cessation programs and clinics to inform clinicians and patients about, and encourage the use of, X-22 as a smoking cessation aid. We will also seek to participate in various government-funded programs which purchase approved smoking cessation aids and then distribute these to smokers at no charge or at greatly reduced prices. RED SUN and MAGIC Cigarettes Goodrich Tobacco has thus far had its cigarette brands contract manufactured by a non-participating manufacturer to the "Master Settlement Agreement" or "MSA," a settlement among 46 states and the tobacco industry administered by the National Association of Attorneys General ("NAAG"). Our subsidiary, Goodrich Tobacco, introduced in a limited capacity two super-premium priced cigarette brands, RED SUN and MAGIC, into the U.S. market in the first quarter 2011. There have been de minimis sales of these brands in 2011 and 2012 since we have intentionally have not expanded marketing and distribution of these brands to facilitate Goodrich Tobacco becoming a participating manufacturer of the MSA. The more RED SUN and MAGIC sold while these brands are produced by a non-participating manufacturer, the greater the settlement costs Goodrich Tobacco likely has to pay to become a participating manufacturer of the MSA. On January 23, 2013, Goodrich Tobacco applied to the Alcohol and Tobacco Tax Trade Bureau ("TTB") for a federal permit to manufacture its own tobacco products. Being a federally licensed tobacco product manufacturer is a primary requirement of becoming a participating manufacturer of the MSA. On February 26, 2013, Goodrich Tobacco applied to the NAAG to become a participating manufacturer to the MSA. Both of these measures, if approved by the TTB and NAAG, will greatly facilitate the sales and distribution potential of RED SUN and MAGIC. Goodrich Tobacco expects its cigarette factory startup costs to be approximately $250,000 and plans to lease a portion of the machinery required. The costs associated with the MSA settlement are expected to be less than $40,000. The expected marketing costs for RED SUN and MAGIC in 2013 are $100,000. In the second quarter of 2013, we intend to focus our marketing efforts on tobacconists, smoke shops and tobacco outlets in the U.S. The ban in 2009 by the FDA of all cigarettes with characterizing flavors (with the exception of menthol) has resulted in a product void in these tobacco channels for super-premium priced products. We believe that certain U.S. cigarette wholesalers and retailers will carry our brands, among other reasons, to increase their margins. SPECTRUM Government Research Cigarettes The National Institute on Drug Abuse ("NIDA"), a component of the National Institutes of Health ("NIH"), provides the scientific community with controlled and uncontrolled research chemicals and drug compounds in its Drug Supply Program. In 2009, NIDA included an option to develop and produce research cigarettes with various levels of nicotine (from very low to high), or Research Cigarette Option, in its request for proposals for a five-year contract for Preparation and Distribution of Research and Drug Products. We have agreed, as a subcontractor to RTI International ("RTI") in RTI s contract with NIDA for the Research Cigarette Option, to supply modified nicotine (from very low to high) cigarettes to NIDA. In August 2010, we met with officials from NIDA, FDA, RTI, the National Cancer Institute and the Centers for Disease Control and Prevention to finalize certain aspects of the design of these research cigarettes. These government research cigarettes are distributed under the mark SPECTRUM. BRAND A and BRAND B The Tobacco Control Act establishes procedures for the FDA to regulate the labeling and marketing of modified risk tobacco products, which includes cigarettes that (i) reduce exposure to tobacco toxins and (ii) are reasonably likely to pose lower health risks as compared to conventional cigarettes ("Modified Risk Cigarettes"). The Tobacco Control Act requires the FDA to issue specific regulations or guidance regarding applications that must be submitted to the FDA for the authorization to label and market Modified Risk Cigarettes. On March 30, 2012, the FDA issued Modified Risk Tobacco Product Applications Draft Guidance. We believe that two of our cigarette products, which we refer to as BRAND A and BRAND B, will qualify as Modified Risk Cigarettes. Compared to commercial cigarettes, the tobacco in BRAND A has approximately 95% less nicotine than tobacco in cigarettes previously marketed as "light" cigarettes, and BRAND B s smoke contains an extraordinary low amount of "tar" per milligram of nicotine. The exact amount of capital is currently unknown since it is uncertain how many exposure studies the FDA will require for BRAND A and BRAND B. However, we estimate that the cost of completing the FDA authorization process for each of our potential Modified Risk Cigarettes to be at least $2 million. We believe that BRAND A and BRAND B will achieve market share in the global cigarette market among smokers who will not quit but are interested in reducing the harmful effects of smoking. There is no guarantee that we will (i) obtain additional capital to complete the FDA authorization process for our potential Modified Risk Cigarettes, (ii) obtain FDA authorization to market BRAND A or BRAND B as Modified Risk Cigarettes, or (iii) achieve significant market with FDA authorization to market our products as Modified Risk Cigarettes. Healthcare Reimbursement The Affordable Care Act enacted on March 23, 2010 and other government and private sector initiatives targeted to limit the growth of healthcare costs are continuing in the U.S. and many other countries where we intend to sell our X-22 smoking cessation aid. These changes are causing the marketplace to put increased emphasis on the delivery of more cost-effective medical products. Government healthcare programs in the United States, including Medicare and Medicaid, private healthcare insurance and managed-care plans have attempted to control costs by limiting the amount of reimbursement for which they will pay for particular procedures or treatments. This may create price sensitivity among potential customers for our X-22 smoking cessation aid, even if we obtain FDA approval for it. Some third-party payers must also approve coverage for new or innovative devices or therapies before they will reimburse healthcare providers who use the medical devices or therapies. Even though a new medical product may have been cleared for commercial distribution, we may find limited demand for X-22 until reimbursement approval has been obtained from governmental and private third-party payers. Approximately 160 million Americans have private health insurance with prescription coverage and the majority, and an increasing number of these plans, cover pharmacologic treatments for smoking cessation. Healthcare payers, including governmental bodies, are increasingly willing to fund smoking cessation treatments due to the expected savings from reducing the incidence of smoking-related illnesses. Approximately 46 million Americans were covered by Medicare in 2009. Medicare provides insurance coverage for up to two smoking cessation attempts per year and each attempt may include four counseling sessions. Approximately 47 million Americans were covered by state Medicaid programs in 2009. Approximately 30% of Medicaid recipients are smokers. Medicaid programs in 42 states and the District of Columbia cover at least one form of pharmacologic treatment for smoking cessation (Chantix , Zyban or NRT). The Affordable Care Act expands Medicaid coverage to all 50 states in 2014. The current retail price of the 12-week prescription of Chantix is over $450, which should give us great latitude in pricing X-22. We expect X-22 to be price competitive with any FDA-approved smoking cessation aid, especially Chantix , which will not only encourage governmental and private third-party payers to cover X-22, but will encourage smokers to attempt to quit with X-22 since they will not have to purchase their usual brand of cigarettes over the 6-week treatment period. Manufacturing Goodrich Tobacco has thus far had its cigarette brands contract manufactured by a non-participating manufacturer to the MSA. After attempting throughout 2012 to negotiate a contract manufacturing agreement with multiple participating manufacturers to the MSA to have RED SUN and MAGIC produced by a participating manufacturer to the MSA, and not coming to terms, on January 23, 2013, Goodrich Tobacco applied to the Alcohol and Tobacco Tax Trade Bureau ("TTB") for a federal permit to manufacture its own tobacco products. Being a federally licensed tobacco product manufacturer is a primary requirement of becoming a participating manufacturer of the MSA. On February 26, 2013, Goodrich Tobacco applied to the NAAG to become a participating manufacturer to the MSA. Both of these measures, if approved by the TTB and NAAG, will greatly facilitate the sales and distribution potential of RED SUN and MAGIC. To facilitate Goodrich Tobacco becoming a participating manufacturer of the MSA, we have curtailed the sales and marketing of these products, especially in 2012 because the more RED SUN and MAGIC that is sold while being produced by a non-participating manufacturer, the greater settlement cost Goodrich Tobacco likely has to pay to become a participating manufacturer of the MSA. Competition In the market for FDA-approved smoking cessation aids, our principal competitors include Pfizer Inc., GlaxoSmithKline PLC, Novartis International AG, and Niconovum AB, a subsidiary of Reynolds American Inc. The industry consists of major domestic and international companies, most of which have existing relationships in the markets into which we plan to sell, as well as financial, technical, marketing, sales, manufacturing, scaling capacity, distribution and other resources, and name recognition substantially greater than ours. Cigarette companies compete primarily on the basis of product quality, brand recognition, brand loyalty, taste, innovation, packaging, service, marketing, advertising, retail shelf space and price. Cigarette sales can be significantly influenced by weak economic conditions, erosion of consumer confidence, competitors introduction of low-price products or innovative products, higher cigarette taxes, higher absolute prices and larger gaps between price categories, and product regulation that diminishes the ability to differentiate tobacco products. Domestic competitors include Philip Morris USA, Reynolds American Inc., Lorillard Inc., Commonwealth Brands, Inc., Liggett Group LCC, Vector Tobacco Inc., and Star Scientific Inc. International competitors include Philip Morris International, British American Tobacco, Japan Tobacco Inc., Imperial Tobacco Group and regional and local tobacco companies; and, in some instances, government-owned tobacco enterprises such as the China National Tobacco Corporation. Potential Smoking Cessation Aids Nicotine Vaccines Nicotine vaccines are under development in clinical trials. However, they have not yet achieved the efficacy of other FDA-approved smoking cessation therapies. Nicotine itself is not recognized by the body as a foreign compound since the molecule is too small. In order to stimulate the production of antibodies, nicotine must be attached to a carrier to make the vaccine work. Different vaccine development programs use different carriers. Six companies, Cytos Biotechnology AG, Celtic Pharmaceuticals Holdings, Nabi Biopharmaceuticals, L.P. and Independent Pharmaceutica AB, Selecta Biosciences Inc., and Pfizer Inc. have or have had vaccine candidates in clinical trials. Cytos exclusively licensed its nicotine vaccine candidate to Novartis in 2007 for 35 million Swiss Francs ($30 million) and up to 565 million Swiss Francs ($492 million) in milestone payments and royalties. In October 2009, it was announced that Cytos nicotine vaccine candidate failed to show efficacy in a Phase II trial. GlaxoSmithKline Biologicals SA exclusively licensed Nabi s nicotine vaccine candidate, NicVAX , in an agreement which was approved by Nabi s shareholders in March 2010. Together with an upfront non-refundable fee of $40 million paid by GlaxoSmithKline, Nabi is eligible to receive over $500 million in option fees and milestones, not including potential royalties on global sales. Both of Nabi s Phase III NicVAX clinical trials subsequently failed in 2010 and 2012. Selecta Biosciences initiated Phase 1 trials of a nicotine vaccine in 2011. Pfizer initiated Phase 1 trials of a nicotine vaccine in 2012. These vaccine treatments entail six (6) to seven (7) consecutive monthly injections. Increases in abstinence rates have been reported but only among a minority of trial subjects with the highest levels of anti-nicotine antibodies. To date, not all subjects develop sufficient antibody levels despite receiving multiple injections. Even in those who do develop sufficient antibody levels, cravings for cigarettes are not addressed by this treatment, although the pharmacological reward of nicotine is suppressed. Expectations are that the treatment, if approved, would need to be repeated every 12 to 18 months to assist in preventing relapse. Electronic or E-cigarettes Although the FDA has not evaluated electronic cigarettes, or e-cigarettes, for quitting smoking, and we are not aware of any published result of a controlled clinical trial of e-cigarettes as a smoking cessation aid comparing efficacy to a placebo or approved therapeutic, e-cigarettes are included here since there have been unconfirmed claims that these products facilitate cessation. E-cigarettes have been the subject of much controversy for this and various other reasons, including the fact that these products are actually not cigarettes at all but are battery-operated devices filled with nicotine, flavor and other chemicals. They turn nicotine and other chemicals into a vapor that is inhaled. E-cigarettes have nicotine kinetics and delivery very similar to nicotine inhalers, a prescription NRT product already approved by the FDA, which is the reason we believe that using e-cigarettes to quit smoking is not likely to be any more effective than other nicotine replacement products. In a September 9, 2010 press release, the FDA issued warning letters to five e-cigarette distributors for various violations of the Federal Food, Drug, and Cosmetic Act, including unsubstantiated claims and poor manufacturing practices. The FDA said these e-cigarette companies are illegally marketing their products as tools to help people quit using cigarettes. The FDA believes e-cigarettes "[m]eet the definition of a combination drug-device product under the Federal Food, Drug and Cosmetic Act." In a letter to the Electronic Cigarette Association of the same date, the FDA said the agency intends to regulate electronic cigarettes and related products in a manner consistent with its mission of protecting the public health. Although the number of adverse event reports for tobacco products submitted to the FDA is low, according to the Center for Tobacco Products more than half (46 of 84) of all reports submitted from 2009 through the first quarter of 2012 were for e-cigarettes (Chen, Nicotine Tob Res 15:615-6, 2013). The FDA confiscated imports of e-cigarettes and has been in litigation with importers of these products. A federal appeals court ruled on December 7, 2010 that the FDA can only regulate electronic cigarettes as tobacco products rather than as a drug-delivery device. The FDA appealed this decision; however, the U.S. Court of Appeals for the District of Columbia Circuit on January 2011 rejected the FDA s request to have the court review the December 7, 2010 decision. According to the FDA Public Health Focus web page on e-cigarettes, the Center for Tobacco Products intends to regulate electronic cigarette products that do not make a therapeutic claim as tobacco products. The Department of Health and Humans Services regulatory calendar for 2013 states that the FDA intends to issue a proposed rule deeming products other than cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco that meet the statutory definition of "tobacco product" to be subject to the Federal Food, Drug, and Cosmetic Act by April 2013. Any e-cigarette product marketed as a smoking cessation aid would still be regulated as a drug-device product by the Center for Drug Evaluation and Research, and efficacy and safety must be evaluated in controlled clinical trials. Government Regulation Smoking Cessation Aids Government authorities in the U.S. and foreign countries extensively regulate the research, development, testing, manufacture, labeling, promotion, advertising, distribution, sampling, marketing and import and export of pharmaceutical products. FDA approval must be obtained, as has been the case for decades, before a product can be marketed for quitting smoking or reducing withdrawal symptoms. In addition, as with all FDA-approved prescription drugs, the FDA must approve the brand name of our X-22 smoking cessation aid. The FDA approval process for smoking cessation aids is similar to that required by the FDA for new drug approvals, although the cost to complete clinical trials for a smoking cessation aid such as X-22 are generally far less than clinical trials for drugs. The primary endpoint of the clinical trial for smoking cessation aids is smoking abstinence, which is generally confirmed by inexpensive, noninvasive biomarker tests. Since potential quitters are already smokers, X-22 will not expose participants in the clinical trials to any new compounds, unlike a new chemical entity, such as Chantix . The process of obtaining governmental approvals and complying with ongoing regulatory requirements requires the expenditure of substantial time and financial resources. In addition, statutes, rules, regulations and policies may change and new legislation or regulations may be issued that could delay such approvals. If we fail to comply with applicable regulatory requirements at any time during the product development process, approval process, or after approval, we may become subject to administrative or judicial sanctions. These sanctions could include the FDA s refusal to approve pending applications, withdrawals of approvals, clinical holds, warning letters, product recalls, product seizures, total or partial suspension of our operations, injunctions, fines, civil penalties or criminal prosecution. Any agency enforcement action could have a material adverse effect on us. The U.S. regulatory scheme for the development and commercialization of new drugs can be divided into three distinct phases: an investigational phase including both preclinical and clinical investigations leading up to the submission of a New Drug Application ("NDA"); a period of FDA review culminating in the approval or refusal to approve the NDA; and the post-marketing period. Preclinical Phase The preclinical phase involves the characterization, product formulation and animal testing necessary to prepare an IND Application for submission to the FDA. The IND must be reviewed and authorized by the FDA before the drug can be tested in humans. Once a new drug agent has been identified and selected for further development, preclinical testing is conducted to confirm pharmacological activity, to generate safety data, to evaluate prototype dosage forms for appropriate release and activity characteristics, and to confirm the integrity and quality of the material to be used in clinical trials. A bulk supply of the active ingredient to support the necessary dosing in initial clinical trials must be secured. Data from the preclinical investigations and detailed information on proposed clinical investigations are compiled in an IND submission and submitted to the FDA before human clinical trials may begin. If the FDA does not formally communicate an objection to the IND within 30 days, the specific clinical trials outlined in the IND may go forward. Clinical Phase The clinical phase of drug development follows an IND submission and involves the activities necessary to demonstrate the safety, tolerability, efficacy, and dosage of the substance in humans, as well as the ability to produce the substance in accordance with the FDA s cGMP requirements. Data from these activities are compiled in an NDA requesting approval to market the drug for a given use, or indication. Clinical trials must be conducted under the supervision of qualified investigators in accordance with good clinical practice, and according to IND-approved protocols detailing, among other things, the study objectives and the parameters, or endpoints, to be used in assessing safety and efficacy. Each trial must be reviewed, approved and conducted under the auspices of an independent Institutional Review Board ("IRB"), and each trial, with limited exceptions, must include all subjects informed consent. The clinical evaluation phase typically involves the following sequential process: Phase I clinical trials are conducted in a limited number of healthy subjects to determine the drug s safety, tolerability, and biological performance. The total number of subjects in Phase I clinical trials varies, but is generally in the range of 20 to 80 people (or less in some cases, such as drugs with significant human experience). Phase II clinical trials involve administering the drug to subjects suffering from the target disease or condition to evaluate the drug s potential efficacy and appropriate dose. The number of subjects in Phase II trials is typically several hundred subjects or less. Phase III clinical trials are performed after preliminary evidence suggesting effectiveness has been obtained and safety, tolerability, and appropriate dosing have been established. Phase III clinical trials are intended to gather additional data needed to evaluate the overall benefit-risk relationship of the drug and to provide adequate instructions for its use. Phase III trials usually include several hundred to several thousand subjects. Throughout the clinical testing phase, samples of the product made in different batches are tested for stability to establish shelf life constraints. In addition, increasingly large-scale production protocols and written standard operating procedures must be developed for each aspect of commercial manufacturing and testing. The clinical trial phase is both costly and time-consuming, and may not be completed successfully within any specified time period, if at all. The FDA closely monitors the progress of each of the three phases of clinical trials that are conducted under an IND and may, at its discretion, reevaluate, alter, suspend, or terminate the testing at any time for various reasons, including a finding that the subjects or patients are being exposed to an unacceptable health risk. The FDA can also request additional clinical testing as a condition to product approval. Additionally, new government requirements may be established that could delay or prevent regulatory approval of our products under development. Furthermore, institutional review boards, which are independent entities constituted to protect human subjects in the institutions in which clinical trials are being conducted, have the authority to suspend clinical trials in their respective institutions at any time for a variety of reasons, including safety issues. New Drug Application and Review After the completion of Phase III clinical trials, the sponsor of the new drug submits an NDA to the FDA requesting approval to market the product for one or more indications. An NDA is a comprehensive, multi-volume application that includes, among other things, the results of all preclinical and clinical studies, information about the drug s composition, and the sponsor s plans for producing, packaging, and labeling the drug. In most cases, the NDA must be accompanied by a substantial user fee. The FDA has 60 days after submission to review the completeness and organization of the application, and may refuse to accept it for continued review, or refuse to file, if the application is found deficient. After filing, the FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use. Drugs that successfully complete NDA review may be marketed in the United States, subject to all conditions imposed by the FDA. Prior to granting approval, the FDA generally conducts an inspection of the facilities, including outsourced facilities that will be involved in the manufacture, production, packaging, testing and control of the drug for cGMP compliance. The FDA will not approve the application unless cGMP compliance is satisfactory. If the FDA determines that the marketing application, manufacturing process, or manufacturing facilities are not acceptable, it will outline the deficiencies in the submission and will often request additional testing or information. Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the marketing application does not satisfy the regulatory criteria for approval and refuse to approve the application by issuing a "not approvable" letter. The length of the FDA s review can range from a few months to several years or more. Once an NDA is in effect, significant changes such as the addition of one or more new indications for use generally require prior approval of a supplemental NDA including additional clinical trials or other data required to demonstrate that the product as modified remains safe and effective. Fast Track Development The Food and Drug Administration Modernization Act of 1997 (the "Modernization Act"), establishes a statutory program for relatively streamlined approval of "Fast Track" products, which are defined under the Modernization Act as new drugs or biologics intended for the treatment of a serious or life-threatening condition that demonstrates the potential to address unmet medical needs for this condition. Fast Track status requires an official designation by the FDA. The Tobacco Control Act provides that products for smoking cessation, such as X-22, be considered for "Fast Track" designation by the FDA. A product that receives Fast Track designation is eligible for (i) more frequent meetings with the FDA to discuss the drug s development plan and ensure collection of appropriate data needed to support drug approval, and (ii) more frequent written correspondence from the FDA about such things as the design of the proposed clinical trials. A Fast Track product is also eligible for Rolling Review, in which sections of the NDA can be submitted for review by the FDA before the entire application is completed. A Fast Track product would ordinarily meet FDA criteria for Priority Review. The FDA goal for reviewing a drug with Priority Review status is six months from the filing of the NDA. We submitted a request for Fast Track designation for X-22, and on August 18, 2011, the FDA informed us that it would not grant the designation of X-22 as a Fast Track product at that time because we did not demonstrate that X-22 shows potential to address an unmet medical need. Except for our Phase II-B clinical trial, all smoking cessation studies with very low nicotine ("VLN") cigarettes containing our proprietary tobacco were independent studies and were not sponsored by 22nd Century Ltd under its own Investigational New Drug ("IND"). We plan to reapply for Fast Track designation, but not until results of a clinical trial sponsored by us demonstrates an advantage (over currently approved smoking cessation products) in one of the following areas: efficacy, safety or improvement in some other factor such as compliance (a patient using a product as directed) or convenience. There is no guarantee that the FDA will grant Fast Track designation to X-22. Post-Approval Phase Once the FDA has approved a new drug for marketing, the product becomes available for physicians to prescribe in the U.S. After approval, we must comply with post-approval requirements, including ongoing compliance with cGMP regulations, delivering periodic reports to the FDA, submitting descriptions of any adverse reactions reported, and complying with drug sampling and distribution requirements. We are required to maintain and provide updated safety and efficacy information to the FDA. We must also comply with requirements concerning advertising, product promotions, and labeling. Company Sponsored X-22 Clinical Trials We have met with the FDA regarding the remaining X-22 clinical trials and, based on the FDA s guidance, we developed a plan to conduct a small Phase II-B trial and two larger and concurrent Phase III trials with the same protocols that entail measuring the quitting efficacy of the X-22 cigarette against a typical cigarette with conventional nicotine content that is visually indistinguishable from X-22 (the "active control"). Half of the participants smoke X-22 for six (6) weeks and half of the participants will smoke the active control for six (6) weeks, with all participants instructed to quit on the last day of the six (6)-week treatment period. Smokers who do not smoke over the four (4)-week period immediately following the conclusion of the six (6)-week treatment period (weeks 7 through 10) are considered abstinent. The abstinence (quit) rates of the X-22 group and the active control group are compared for statistical significance. Our Investigational New Drug Application for X-22, a kit of VLN cigarettes, was cleared by the FDA in July 2011. Our X-22 Phase II-B clinical trial was completed in the first quarter of 2012 and did not demonstrate a statistically significant difference in quitting between X-22 and the active control, a cigarette containing conventional nicotine levels. In evaluating the results of this trial, we believe we may have reduced the nicotine content of X-22 by too great a percentage, to a level less than half the nicotine content of VLN cigarettes used in various independent smoking-cessation clinical trials that have demonstrated that use of VLN cigarettes increases quit rates. We continue to believe that our VLN cigarettes are effective as a smoking cessation aid. However, we have suspended sponsoring further X-22 clinical trials pending a complete analysis of results of two independent smoking-cessation trials that were completed in 2012 (ClinicalTrials.gov Identifiers NCT01050569 and NCT01250301), which utilized a different version of our VLN cigarette with a nicotine content similar to those used in previous successful smoking-cessation trials and higher than that used in our own sponsored Phase II-B trial. A portion of the results of these two trials has been disclosed at the 2013 annual meeting of the Society for Research on Nicotine and Tobacco. These preliminary results are promising for the further development of X-22. The full set of results of these 2 independent clinical trials are expected to be published in peer reviewed journals and will be compared to results of other independent clinical trials of our VLN cigarettes and results of our Phase II-B trial to determine which variables optimize cessation. One preliminary hypothesis, in conjunction with results of various other studies of our VLN cigarettes, is that having two types of prescription VLN cigarettes available may be advantageous for increased smoking cessation in the general population; one having a higher nicotine content than the other. Upon identifying a suitable joint venture partner to fund further X-22 clinical trials, we will then request a meeting with the U.S. Food and Drug Administration ("FDA"), and thereafter we may resume our own sponsored X-22 clinical trials. Following FDA approval, we intend to register X-22 as a Medicinal Product (pharmacological) for smoking cessation with the European Medicines Agency ("EMA") and other international FDA-equivalent agencies in targeted countries. Regulatory approval for X-22 as a smoking cessation aid is not required in some international markets since, unlike the FDA, some foreign drug regulatory agencies do not require approval to market a product as a smoking cessation aid if the product is allowed to be sold for other purposes. Modified Risk Cigarettes The Tobacco Control Act, which became law in June 2009, prohibits the FDA from banning cigarettes outright or mandating that nicotine levels be reduced to zero. However, among other things, it allows the FDA to require the reduction of nicotine or any other compound in cigarettes. In 2009, the Tobacco Control Act banned all sales in the United States of cigarettes with flavored tobacco (other than menthol). As of June 2010, all cigarette companies were required to cease using the terms "low tar," "light" and "ultra light" in describing cigarettes sold in the United States. For the first time in history, a U.S. regulatory agency will scientifically evaluate cigarettes that may pose lower health risks as compared to conventional cigarettes. The Tobacco Control Act establishes procedures for the FDA to regulate the labeling and marketing of modified risk tobacco products, which includes cigarettes that (i) reduce exposure to tobacco smoke toxins and/or (ii) pose lower health risks, as compared to conventional cigarettes ("Modified Risk Cigarettes"). We believe this new regulatory environment represents a paradigm shift for the tobacco industry. Besides the fact that the Tobacco Control Act establishes procedures for the FDA to regulate the labeling and marketing of modified risk tobacco products, the Tobacco Control Act allows the FDA to mandate the use of reduced-risk technologies across all conventional tobacco products or cigarettes. We believe the Tobacco Control Act may create opportunities for us to license our proprietary technology and/or tobaccos to larger competitors. Goodrich Tobacco has thus far had its cigarette brands contract manufactured by a non-participating manufacturer to the "Master Settlement Agreement" or "MSA," a settlement among 46 states and the tobacco industry administered by the National Association of Attorneys General ("NAAG"). Our subsidiary, Goodrich Tobacco, introduced in a limited capacity two super-premium priced cigarette brands, RED SUN and MAGIC, into the U.S. market in the first quarter 2011. There have been de minimis sales of these brands in 2011 and 2012 since we have intentionally have not expanded marketing and distribution of these brands to facilitate Goodrich Tobacco becoming a participating manufacturer of the MSA. The more RED SUN and MAGIC sold while these brands are produced by a non-participating manufacturer, the greater the settlement costs Goodrich Tobacco likely has to pay to become a participating manufacturer of the MSA. On January 23, 2013, Goodrich Tobacco applied to the Alcohol and Tobacco Tax Trade Bureau ("TTB") for a federal permit to manufacture its own tobacco products. Being a federally licensed tobacco product manufacturer is a primary requirement of becoming a participating manufacturer of the MSA. On February 26, 2013, Goodrich Tobacco applied to the NAAG to become a participating manufacturer to the MSA. Both of these measures, if approved by the TTB and NAAG, will greatly facilitate the sales and distribution potential of RED SUN and MAGIC. Goodrich Tobacco expects its cigarette factory startup costs to be approximately $250,000 and plans to lease a portion of the machinery required. The costs associated with the MSA settlement are expected to be less than $40,000. In addition to providing our SPECTRUM cigarettes to NIDA for researchers, we have been directly supplying our cigarettes to researchers so additional studies can be conducted to obtain additional information on our products. We expect this information will assist us, along with our own funded studies, in obtaining the necessary FDA authorizations to market BRAND A and BRAND B as Modified Risk Cigarettes and to obtain FDA approval for X-22 as a prescription smoking cessation aid. Biomass Products Biomass products are products such as ethanol made from the organic material, usually plants densely grown over a given area. We have funded extensive biomass field trials conducted by North Carolina State University ("NCSU"), and work on feedstock digestibility and bioconversion at the National Renewable Energy Lab. Bioconversion is the conversion of organic matter into a source of energy, such as ethanol in our own research, through the action of microorganisms. Tobacco has a number of advantages as a starting point for development of novel bioproduct crop systems. Because tobacco is a widely cultivated crop, grown in over 100 countries throughout the world, tobacco agronomy is highly understood. For decades tobacco has been used as a model system for plant biology, and recently the tobacco genome has been mapped. Tobacco plants rapidly sprout back after each harvest and produce large amounts of leaf and total biomass. Tobacco grown for cigarettes yields about 3,000 pounds of cured leaf per acre (~20% moisture) per year from 7,500 tobacco plants. In our field trials in North Carolina, nicotine-free tobacco grown for biomass yields about 100,000 pounds of fresh weight per acre (which equals 10,000 pounds of dry weight) per year with multiple machine harvests from about 80,000 tobacco plants. The results of our biomass studies have been summarized in a comprehensive feasibility study relating to our nicotine-free tobacco biomass crop (Verfola) to produce a variety of bioproducts. First, protein and other plant fractions are extracted, and then biofuels and other products are produced from the remaining cellulosic residue. In 2008, we put our biomass development projects on hold so that our management could focus its attention and resources on our modified risk cigarette business and our X-22 smoking cessation business. We do not plan to move forward with potential biomass business activities until some period of time after FDA approval of X-22 or FDA authorization to market Brand A or Brand B as a Modified Risk Cigarette. We currently are not spending any capital for such potential biomass business activities nor do we have any current plans to raise any capital for such potential biomass business activities. Research and Development Most research and development (R&D) since our inception have been outsourced to highly qualified groups in their respective fields. Since 1998, 22nd Century has had multiple R&D agreements with North Carolina State University ("NCSU") resulting in exclusive worldwide licenses to various patented technologies. We have utilized the model of many public-sector research organizations which entails obtaining an exclusive option or license agreement to any invention arising out of the funded research. In all cases, we fund and exclusively control all patent filings as the exclusive licensee. This model of contracting with public-sector researchers has enabled 22nd Century to control R&D costs while achieving our desired results, including obtaining exclusive intellectual property rights relating to all of our outsourced R&D. Other R&D partners with the same arrangement have included the National Research Council of Canada, Plant Biotechnology Institute in Saskatoon, Canada ("NRC"), and the Nara Institute of Science and Technology in Nara, Japan ("NAIST"). The majority this R&D has involved the biosynthesis of nicotine in plants. Our R&D agreements with NCSU, NRC and NAIST expired in 2009. We did not have any outsourced R&D projects during 2010. In 2010, NAIST assigned to us all of their worldwide patents and patent applications that were previously licensed to 22nd Century on an exclusive basis. These patents and patent applications were a result of our R&D at NAIST. In November 2011, we entered into an R&D agreement with the University of Virginia (UVA) relating to nicotine biosynthesis in tobacco plants with a total budget of $500,000 for the period from November 2011 through December 2014. In 2012, we incurred approximately $100,000 of expenses for the R&D agreement at UVA. During the years ended December 31, 2012, 2011 and 2010, we incurred research and development expenses of approximately $729,000, $2,098,000 and $364,000, respectively. Other than the R&D agreement at UVA, we have no other substantial third-party R&D commitments requiring funding. However, we may carry out a minimal amount of R&D in 2013, not to exceed $100,000, for additional field trials of plants from our seed lots that resulted from our R&D at NCSU, NRC, NAIST and UVA. Upon the required funding, we expect to carry out exposure studies for our modified risk cigarette candidates and will carry out additional clinical trials for X-22 if Hercules Pharmaceuticals, our subsidiary, identifies a joint venture partner willing to fund these trials. Employees We currently employ six (6) people, none of whom are represented by a union, and we consider our employee relations to be good. Description of Property Our principal administrative offices are located in Clarence, New York. We currently lease 3,800 square feet of office space. The lease commenced September 1, 2011 and expires August 31, 2014. Scheduled rent remaining as of December 31, 2012 is $37,833 for 2013 and $28,000 for 2014. Legal Proceedings From time to time we may be involved in claims arising in the ordinary course of business. To our knowledge, no legal proceedings, governmental actions, investigations or claims are currently pending against us or involve us that, in the opinion of our management, could reasonably be expected to have a material adverse effect on our business and financial condition. Management s Discussion and Analysis of Financial Condition and Results of Operations The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion contains forward-looking statements. Please see "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" earlier in this prospectus. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere herein, including those discussed in the section entitled "Risk Factors." On January 25, 2011, 22nd Century Limited, LLC completed a reverse merger transaction (the "Merger") with 22nd Century Group, Inc. 22nd Century Limited, LLC is a wholly owned subsidiary of 22nd Century Group, Inc. which continues to operate the business of 22nd Century Limited, LLC. All references to shareholders or common shares include the historical members and membership Units of 22nd Century Limited, LLC because, in the Merger, such Units were exchanged for common shares on a one-for-one basis and from an accounting standpoint, they are equivalent. The Merger is being accounted for as a reverse acquisition and a recapitalization; 22nd Century Limited, LLC is the acquirer for accounting purposes. Consequently, the assets and liabilities and the historical operations that are reflected in the financial statements prior to the Merger are those of 22nd Century Limited, LLC and are recorded at the historical cost basis of 22nd Century Limited, LLC, and the consolidated financial statements since completion of the Merger include the assets and liabilities of 22nd Century Limited, LLC, historical operations of 22nd Century Limited, LLC and operations of 22nd Century Group, Inc. from the closing date of the Merger. For purposes of this Management s Discussion and Analysis of Financial Condition and Results of Operations, references to the "Company," "we," us" or "our" refer to the operations of 22nd Century Group, Inc. and its direct and indirect subsidiaries for the periods described herein. Overview 22nd Century Ltd, our wholly-owned subsidiary, is a plant biotechnology company and we believe the global leader in modifying the content of nicotinic alkaloids in tobacco plants through genetic engineering and plant breeding. We own or exclusively control 107 issued patents and exclusively control 39 patent applications; we own 12 issued patents plus 22 patent applications and we license on an exclusive basis 95 issued patents and 17 patent applications. Hercules Pharmaceuticals, LLC ("Hercules Pharmaceuticals") and Goodrich Tobacco Company, LLC ("Goodrich Tobacco") are wholly-owned subsidiaries of 22nd Century Ltd. Goodrich Tobacco is focused on commercial tobacco products and potential Modified Risk cigarettes. Hercules Pharmaceuticals is focused on X-22, a prescription smoking cessation aid in development. We believe that our proprietary technology will enable us to capture a share of the global market for approved smoking cessation aids and the emerging market for modified risk tobacco products. The Company is primarily involved in the following activities: The international licensing of 22nd Century Ltd s technology, proprietary tobaccos, trademarks and brands; The development of its X-22 prescription smoking cessation aid in development; The development of its modified risk tobacco products; The pursuit of necessary regulatory approvals and clearances at the U.S. Food and Drug Administration (the "FDA") to market X-22 as a prescription smoking cessation aid and BRAND A and BRAND B as Modified Risk Cigarettes in the U.S.; The manufacture, marketing and distribution of RED SUN and MAGIC proprietary cigarettes; and The production of SPECTRUM research cigarettes for the National Institute on Drug Abuse ("NIDA"). We have operated at a loss since 2006 when we increased our research and development expenditures. In the years ended December 31, 2012, 2011 and 2010 we realized revenues of $18,775, $788,601 and $49,784, respectively mainly from our research cigarette program, and in 2009 we realized sales of $27,612 from limited test marketing of our cigarettes. We are in the process of transitioning from solely developing proprietary technology and tobacco to developing and commercializing our own technology and products. Our prospects depend on our ability to generate and sustain revenues from (i) sales of RED SUN and MAGIC, our X-22 smoking cessation aid, our potential Modified Risk cigarettes and our proprietary tobacco and (ii) licensing of our technology and products. Our ability to generate meaningful revenue from X-22, especially in the United States, depends on FDA approval, and our ability to generate meaningful revenue from our potential Modified Risk cigarettes in the U.S. depends in large part on obtaining FDA authorization to market these products as Modified Risk cigarettes. If our products are approved and authorized by the FDA, we must still meet the challenges of successful marketing and distribution and consumer acceptance. We are currently in the process of identifying potential joint venture partners to fund the remaining X-22 clinical trials. We estimate the cost of completing the remaining X-22 clinical trials to be approximately $14 million and the marketing expenses to bring X-22 to market in the U.S. are estimated to be approximately $5 million. There is no guarantee that we will (i) obtain the funds necessary to complete additional clinical trials, (ii) identify potential joint venture partners to fund the remaining X-22 clinical trials, (iii) obtain FDA approval, or (iv) capture significant share of the smoking cessation market upon FDA approval. Goodrich Tobacco has thus far had its cigarette brands contract manufactured by a non-participating manufacturer to the "Master Settlement Agreement" or "MSA," a settlement among 46 states and the tobacco industry administered by the National Association of Attorneys General ("NAAG"). Our subsidiary, Goodrich Tobacco, introduced in a limited capacity two super-premium priced cigarette brands, RED SUN and MAGIC, into the U.S. market in the first quarter 2011. There have been de minimis sales of these brands in 2011 and 2012 since we have intentionally have not expanded marketing and distribution of these brands to facilitate Goodrich Tobacco becoming a participating manufacturer of the MSA. The more RED SUN and MAGIC sold while these brands are produced by a non-participating manufacturer, the greater the settlement costs Goodrich Tobacco likely has to pay to become a participating manufacturer of the MSA. On January 23, 2013, Goodrich Tobacco applied to the Alcohol and Tobacco Tax Trade Bureau ("TTB") for a federal permit to manufacture its own tobacco products. Being a federally licensed tobacco product manufacturer is a primary requirement of becoming a participating manufacturer of the MSA. On February 26, 2013, Goodrich Tobacco applied to the NAAG to become a participating manufacturer to the MSA. Both of these measures, if approved by the TTB and NAAG, will greatly facilitate the sales and distribution potential of RED SUN and MAGIC. Goodrich Tobacco expects its cigarette factory startup costs to be approximately $250,000 and plans to lease a portion of the machinery required. The costs associated with the MSA settlement are expected to be less than $40,000. Our Investigational New Drug Application for X-22, a kit of very low nicotine ("VLN") cigarettes, was cleared by the FDA in July 2011. Our X-22 Phase II-B clinical trial was completed in the first quarter of 2012 and did not demonstrate a statistically significant difference in quitting between X-22 and the active control, a cigarette containing conventional nicotine levels. In evaluating the results of this trial, we believe we may have reduced the nicotine content of X-22 by too great a percentage, to a level less than half the nicotine content of VLN cigarettes used in various independent smoking-cessation clinical trials that have demonstrated that use of VLN cigarettes increases quit rates. We continue to believe that our VLN cigarettes are effective as a smoking cessation aid. However, we have suspended sponsoring further X-22 clinical trials pending a complete analysis of results of two independent smoking-cessation trials that were completed in 2012 (ClinicalTrials.gov Identifiers NCT01050569 and NCT01250301), which utilized a different version of our VLN cigarette with a nicotine content similar to those used in previous successful smoking-cessation trials and higher than that used in our own sponsored Phase II-B trial. A portion of the results of these two trials has been disclosed at the 2013 annual meeting of the Society for Research on Nicotine and Tobacco. These preliminary results are promising for the further development of X-22. The full set of results of these 2 independent clinical trials are expected to be published in peer reviewed journals and will be compared to results of other independent clinical trials of our VLN cigarettes and results of our Phase II-B trial to determine which variables optimize cessation. One preliminary hypothesis, in conjunction with results of various other studies of our VLN cigarettes, is that having two types of prescription VLN cigarettes available may be advantageous for increased smoking cessation in the general population; one having a higher nicotine content than the other. Upon identifying a suitable joint venture partner to fund further X-22 clinical trials, we will then request a meeting with the U.S. Food and Drug Administration ("FDA"), and thereafter we may resume our own sponsored X-22 clinical trials. The Company expects to file applications in 2013 with the FDA for two types of Modified Risk cigarettes in accordance with the FDA s issued Modified Risk Tobacco Product Applications Draft Guidance released on March 30, 2012. This provides the framework for applicants to submit data for modified risk product candidates. Goodrich Tobacco, our subsidiary, has developed two types of potential Modified Risk cigarettes. The first proprietary cigarette, referred to as BRAND A, is a VLN cigarette containing approximately 95 percent less nicotine than the leading U.S. cigarette brands. 22nd Century s recent Phase II-B clinical trial and studies by independent researchers have demonstrated that smoke exposure (and cigarettes per day) is significantly reduced with VLN cigarettes. The second proprietary cigarette, referred to as BRAND B, is a low-tar cigarette with a relatively high nicotine content, effectively the world s lowest tar-to-nicotine ratio cigarette. Unlike low-tar/low-nicotine brands currently on the market (previously labeled "light" or "ultra- light" before these descriptors were banned in the U.S. by the Tobacco Control Act in 2010), the nicotine yield of BRAND B is not reduced. Studies have demonstrated that for those smoking low-tar research cigarettes, similar to BRAND B, compensatory smoking is greatly curtailed as compared to those smoking regular cigarettes. Additional studies will be necessary to establish whether BRAND B cigarettes achieve similar results. The National Institute on Drug Abuse ("NIDA"), a component of the National Institutes of Health ("NIH"), provides the scientific community with controlled and uncontrolled research chemicals and drug compounds in its Drug Supply Program. In 2009, NIDA included an option to develop and produce research cigarettes with various levels of nicotine (from very low to high), or Research Cigarette Option, in its request for proposals for a five-year contract for Preparation and Distribution of Research and Drug Products. We have agreed, as a subcontractor to RTI International ("RTI") in RTI s contract with NIDA for the Research Cigarette Option, to supply modified nicotine cigarettes to NIDA. In August 2010, we met with officials from NIDA, FDA, RTI, the National Cancer Institute and the Centers for Disease Control and Prevention to finalize certain aspects of the design of these research cigarettes. These government research cigarettes are distributed under the Company s mark SPECTRUM. The Company delivered approximately 9 million SPECTRUM research cigarettes during the year ended December 31, 2011 and delivered an additional 2.7 million SPECTRUM research cigarettes in July 2012. Results of Operations Year Ended December 31, 2012 Compared to Year Ended December 31, 2011 Revenue. In the year ended December 31, 2012, we realized revenue of $18,775, mainly from our research cigarette program, as compared to revenue of $788,601 in year ended December 31, 2011. As of December 31, 2012 we had an outstanding backorder of approximately $3,000 for our research cigarettes. Other income. In the year ended December 31, 2011, we recognized other income of $223,540 from a therapeutic grant award we received in fourth quarter of 2010. Costs of goods sold. In the year ended December 31, 2012, costs of goods sold were $67,967 which exceeded revenue by 262% since we provided RTI with certain SPECTRUM research cigarettes without charge mainly due to production delays. In the year ended December 31, 2011, costs of goods sold were $418,171 or 53% of revenue. Costs of goods sold in the year ended December 31, 2011 include inventories written off in the fourth quarter of 2011 of $178,670 due to changes in the Company s manufacturing plans that rendered these costs not recoverable. Research and development expense. Research and development expense was $729,225 in the year ended December 31, 2012, a decrease of $1,368,755, or 65%, from $2,097,980 in the year ended December 31, 2011. This decrease is mainly the result of suspending our clinical trials for X-22 early in the first quarter of 2012. In the year ended December 31, 2011 approximately $1.6 million was for expenditures related to the filing of our Investigational New Drug Application and our Phase II-B clinical trials for X-22. General and administrative expense. General and administrative expense was $2,205,450 in the year ended December 31, 2012, an increase of $419,907, or 24%, from $1,785,543 in the year ended December 31, 2011. The increase was mainly attributable to the $337,165 increase in equity based compensation costs for administrative personnel which were $662,601 in 2012 as compared to $325,436 in 2011. The remainder of the increase was due to costs associated with investor relations activities. Sales and marketing costs. Sales and marketing costs were $61,876 in the year ended December 31, 2012, a decrease of $224,157, or 78%, from $286,033 in the year ended December 31, 2011. The costs in 2011 related to the domestic market introduction of RED SUN and MAGIC and included expenses related to product testing, product and packaging design, product branding, trade samples, trade shows and advertising. Early in 2012, we curtailed marketing of these brands in order to facilitate reaching an agreement to have these products produced by a participating manufacturer of the MSA and, as a result, sales and marketing costs in 2012 were reduced as compared to 2011. Amortization and depreciation expense. Amortization and depreciation expense relates almost entirely to capitalized patent and trademark costs. Amortization and depreciation expense increased 10% in the year ended December 31, 2012 to $198,406, up from $179,953 in the year ended December 31, 2011. This increase of $18,453 is mainly due to our additional investment in patents and trademarks in 2011 of $98,191and in 2012 of $162,774. Warrant liability change – net. In multiple private placements in 2012, we issued warrants which were accounted for as derivatives and upon issuance a liability at the estimated fair value was recorded. At the date of issuance of these warrants the value exceeded the total consideration received by an aggregate of $814,500 resulting in an immediate charge to expense for this amount. This charge was in addition to the loss of $1,183,543 resulting from the increase in the estimated fair value during the year ended December 31, 2012 of all warrants we have issued. The market adjustment recorded in the year ended December 31, 2011 was a gain of $2,511,750. The change in the fair value of the warrant liability has been caused mainly by the decrease of the price of our common stock. Interest expense and amortization of debt discount and expense. Interest expense and amortization of debt discount and debt issuance costs increased in the year ended December 31, 2012 to $1,494,545 from $103,998 in the year ended December 31, 2011. This increase of $1,390,547 or 1,337% was primarily a result of the amortization of debt discount and debt issuance costs related to convertible notes issued on December 14, 2011 and August 9, 2012, which also includes charges interest expense for the value of warrants in excess of the note payable converted, totaling approximately $31,000 related to the partial conversions of the December 14, 2011 Convertible Notes. Net loss. We had a net loss in the year ended December 31, 2012 of $6,736,737 as compared to a net loss of $1,347,787 in the year ended December 31, 2011, as a result of the warrant liability change and an increase in interest expense and amortization of debt discount and expense as well as a reduction in revenues. Liquidity and Capital Resources Summary of Balances and Recent Sources and Uses As of December 31, 2012, we had negative working capital of approximately $3.3 million as compared to negative working capital of approximately $1.9 million at December 31, 2011. The $1.4 million increase in negative working capital was primarily the result of $1.7 million of cash used in operations and $1.2 million of note discount amortization that resulted in an increase in the carrying value of the convertible notes, which were offset by approximately $1.5 million of proceeds from equity securities we issued during 2012. Cash demands on operations In 2012 and 2011, we operated at a loss and operating activities consumed more than $5.2 million in cash during this two year period. Cash on hand at December 31, 2012 of $188 was insufficient to fund operations and meet our obligations as they come due in 2013. The Company has suspended clinical trials for X-22 and is seeking licensing agreements for its products with both domestic and international businesses. At December 31, 2012, the Company had current assets of $1,281,305 and current liabilities of $4,602,948. On January 11, 2013, the Company closed a private placement and realized net proceeds of approximately $2.125 million. From January 1, 2013 through February 6, 2013, the Convertible Notes with a carrying value at December 31, 2012 of approximately $1.41 million were converted into common stock and warrants. While both these steps significantly improved the Company s financial position; we will need additional capital or one or more licensing arrangements for our technology and products in order to meet cash requirements to fund operations and meet our obligations during 2013. Excluding contract growing of our proprietary tobacco with farmers and extraordinary expenses such as clinical trials and factory setup costs, our monthly cash expenditures are approximately $100,000. In the event the Company does not enter into an out-licensing agreement with a third party in 2013, approximately $1.6 million of additional capital is required through 2013, which includes paying approximately $1 million of obligations that will become due in 2013. The Company expects its cigarette factory startup costs to require an additional $250,000 of capital. It plans to lease a portion of the machinery required. There can be no assurance that the Company will be able to raise sufficient capital or obtain a licensing agreement. Other than the R&D agreement at UVA, the Company has no other substantial third-party R&D commitments requiring funding. The Company may carry out a minimal amount of R&D in 2013, not to exceed $100,000, for additional field trials of plants from our seed lots that resulted from our R&D at NCSU, NRC, NAIST and UVA. Upon the required funding, we expect to carry out exposure studies for our Modified Risk cigarette candidates and will carry out additional clinical trials for X-22 if Hercules Pharmaceuticals, our subsidiary, identifies a joint venture partner willing to fund these trials. The ability to complete additional equity or debt financings on acceptable terms will depend on a number of factors, including the general performance of the capital markets, the Company s progress in the manufacture, distribution and sale of its products, licensing of its technology, products and tobacco, and results on independent smoking cessation clinical trials utilizing the Company s products. In addition, our ability to complete additional debt and equity financings is limited by covenants related to our Series A-1 Preferred Stock, unless we issue securities to an entity in a business synergistic to ours. Failure to license the Company s technology, products and tobacco or to raise sufficient capital would significantly increase the risk that we would be unable to continue operations. To the extent that we raise additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to our technology, tobacco or products or grant licenses on terms that are not favorable to us. Net Cash used in Operating Activities. In the year ended December 31, 2012, $1,764,445 of cash was used in operating activities compared to $3,449,430 of cash used in operating activities in the year ended December 31, 2011. This decreased use of cash of $1,684,985 was mainly due to the decrease of clinical trial expenses in 2012 as compared to 2011 and less cash was used in paying down debt in 2012 as compared to 2011. Net Cash used in Investing Activities. In the year ended December 31, 2012, we used $162,774 of cash related to third party costs incurred for patents and trademarks and the acquisition of office furniture and fixtures as compared to $607,297 used in the year ended December 31, 2011. This decrease was attributable to our payment, in 2011, of $500,000 towards outstanding patent costs charges that were deferred in prior periods. Net Cash From Financing Activities. During the year ended December 31, 2012, we generated $1,675,158 from our financing activities mainly as a result of the $1,467,500 proceeds from the May and November 2012 private placements, the $210,000 proceeds from the August 9, 2012 convertible notes, $4,136 in advances from officers and $56,000 in proceeds from the issuance of short term secured notes, partially offset by payments on borrowings of $41,000 and net payments to a related party of $21,478. During the year ended December 31, 2011, we generated net cash of $4,308,666 from our financing activities; we received approximately $3,293,789 in net cash proceeds from the private placement that closed on January 25, 2011, and approximately $1.7 million from the issuance of the December 14, 2011 Convertible Notes and $215,000 from the issuance of notes; these receipts were partially offset by the payments on borrowings of a $443,276, payment of debt issuance costs of $23,500, $10,914 in net advances to officers and net payments to a related party of a related party $22,433. Critical Accounting Policies and Estimates Accounting principles generally accepted in the United States of America, or U.S. GAAP, require estimates and assumptions to be made that affect the reported amounts in our consolidated financial statements and accompanying notes. Some of these estimates require difficult, subjective and/or complex judgments about matters that are inherently uncertain and, as a result, actual results could differ from those estimates. Due to the estimation processes involved, the following summarized accounting policies and their application are considered to be critical to understanding our business operations, financial condition and results of operations. Revenue Recognition We recognize revenue at the point the product is shipped to a customer and title has transferred. Revenue from the sale of our products is recognized net of cash discounts, sales returns and allowances. Federal cigarette excise taxes are included in net sales and accounts receivable billed to customers, except on sales of SPECTRUM and exported cigarettes in which such taxes do not apply. We were chosen to be a subcontractor for a 5-year government contract between RTI International ("RTI") and the National Institute on Drug Abuse ("NIDA") to supply NIDA research cigarettes which includes four development stages. These government research cigarettes are distributed under the mark SPECTRUM. The Company completed the four developmental stages and delivered approximately 9 million cigarettes during the year ended December 31, 2011 and recognized the related revenue. Revenue related to the additional 2.7 million SPECTRUM research cigarettes we shipped in July 2012 was recognized at the point the cigarettes were shipped and title transferred. Future revenue under this sub-contract arrangement is expected to be related to the delivery of SPECTRUM and will be recognized at the point the product is shipped and title has transferred. Impairment of Long-Lived Assets We review the carrying value of amortizing long-lived assets whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be appropriate. We also assess recoverability of the asset by estimating the future undiscounted net cash flows expected to result from the asset, including eventual disposition. If the estimated future undiscounted net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset s carrying value and its fair value. Non-amortizing intangibles (e.g., patents and trademarks) are reviewed annually for impairment. We have not recognized any impairment losses during the two year period ended December 31, 2012. Amortization Estimates of Intangible Assets We generally determine amortization based on the estimated useful lives of the assets and record amortization expense on a straight-line method over such lives. The remaining life of the patent is generally used to determine the estimated useful life of the related patent costs. Valuation of our Equity Securities The Company uses a fair-value based method to determine compensation for all arrangements under which Company employees and others receive shares, options or warrants to purchase common shares of 22nd Century Group. Stock based compensation expense is recorded over the requisite service period based on estimates of probability and time of achieving milestones and vesting. For accounting purposes, the shares will be considered issued and outstanding upon vesting. Convertible Debt When the convertible feature of the conventional convertible debt is issued, the embedded conversion feature is evaluated to determine if bifurcation and derivative treatment is required whether there is a beneficial conversion feature. When the convertible debt provides for an effective rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (BCF"). Prior to the determination of the BCF, the proceeds from the debt instrument were first allocated between the convertible debt and any embedded or detachable free standing instruments that are included, such as common stock and warrants. We record a BCF as a debt discount pursuant to FASB ASC Topic 470-20. In those circumstances, the convertible debt will be recorded net of the discount related to the BCF. We amortize the discount to interest expense over the life of the debt. For the convertible notes issued December 2011 and August 2012, we recorded the OID and the BCF related to these convertible notes as a debt discount and recorded the convertible notes net of the discount related to both the OID and the BCF. Debt discount is amortized to interest expense over the life of the debt. Income taxes Prior to the closing of the Merger, 22nd Century Ltd was organized as a limited liability company and treated as a partnership for income tax purposes; accordingly prior to the Merger, 22nd Century Ltd was not directly responsible for income taxes (income and losses passed through to its LLC members) and did not have to account for them. Following the Merger on January 25, 2011, we are subject to federal and state income taxes. Accordingly, since the Merger date, we are required to recognize deferred tax assets and liabilities for any differences in basis in assets and liabilities between tax and GAAP reporting. Due to the uncertainty of the Company s ability to generate sufficient taxable income in the future it has determined that it is more likely than not that its net deferred tax asset, which includes net operating loss carryforwards, will not be realized. Accordingly, the Company has recorded a full valuation allowance to reduce the net deferred tax asset to zero for the period from January 25, 2011 through December 31, 2011 and for the 2012 calendar year. The Company incurred net operating losses for each of these periods and accordingly has made no provision for current income taxes. Derivative Financial Instruments We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations. The methodology for valuing our outstanding warrants classified as derivative instruments utilizes a lattice model approach which includes probability weighted estimates of future events including volatility of our common stock. A financial asset or liability s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The warrant liability is measured at fair value using certain estimated factors such as volatility and probability which are classified within Level 3 of the valuation hierarchy. Significant unobservable inputs are used in the fair value measurement of the Company s derivative warrant liabilities include volatility. Significant increases (decreases) in the volatility input would result in a significantly higher (lower) fair value measurement. A 10% increase or decrease in the volatility factor used as of December 31, 2012 would have the impact of increasing or decreasing the liability by approximately $875,000. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date. Inflation Inflation did not have a material effect on our operating results for the two years ended December 31, 2012 and 2011. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements as defined by Item 303(a)(4) of Regulation S-K. Directors and Executive Officers Set forth below is information regarding our directors, executive officers and key personnel. Name Age Position Joseph Pandolfino 44 Chief Executive Officer and Director Henry Sicignano, III 45 Chief Financial Officer, President, Secretary and Director Michael R. Moynihan, Ph.D. 60 Vice President of R&D Joseph Alexander Dunn, Ph.D. 59 Director James W. Cornell 56 Director Our executive officers are appointed by the board of directors and serve at the discretion of the board. There are no family relationships among our directors and executive officers. Our bylaws provide that the number of members of our Board of Directors shall not be less than one nor more than thirteen. The number of authorized directors as of the date of this prospectus is four. Directors hold office for a one year term expiring at the annual meeting in 2013 (or until their respective successors are elected and qualified, or until their earlier death, resignation or removal). The experience, qualifications, attributes and skills that led to the conclusion that the persons should serve as a Director of our Company are described below in each Director nominee s biography. Joseph Pandolfino, MBA, Chief Executive Officer and Director Mr. Pandolfino, age 44, has served as our Chief Executive Officer and as a Director since the closing of the merger in January 2011 between the Company and 22nd Century Limited, LLC. He founded 22nd Century Limited, LLC in 1998 and has over 15 years experience in all aspects of the tobacco industry, including 12 years with genetically-engineered tobacco. He served as President of 22nd Century Limited, LLC from its inception until April 2010 and as Chief Executive Officer of 22nd Century Limited, LLC since April 2010. Mr. Pandolfino oversees our operations, strategy and product development. Mr. Pandolfino holds a B.S. Degree in Business Administration from Medaille College and an M.B.A. Degree from the State University of New York at Buffalo. Mr. Pandolfino s significant experience in all aspect of the tobacco industry as well as his experience leading 22nd Century Limited, LLC led to our conclusion that he should serve as a director of our Company. Henry Sicignano, III, MBA, Chief Financial Officer, President and Director Henry Sicignano, III, MBA. Mr. Sicignano, age 45, has served as our President and Secretary since the closing of the merger in January 2011 between the Company and 22nd Century Limited, LLC, as a Director since March 4, 2011, and as interim Chief Financial Officer since July 6, 2012. From August 2005 to April 2009, Mr. Sicignano served as a General Manager and as the Director of Corporate Marketing for NOCO Energy Corp., a petroleum products company; and from March 2003 to July 2005, as Vice President of Kittinger Furniture Company, Inc., a fine furniture manufacturer. From February 1997 through July 2002, he served as Vice President and Marketing Director of Santa Fe Natural Tobacco Company, a specialty tobacco company, prior to the sale of that company to R.J. Reynolds Tobacco Company in 2002. Mr. Sicignano holds a B.A. Degree in Government from Harvard College and an M.B.A. Degree from Harvard University. Mr. Sicignano s extensive experience in management, including in the tobacco industry, led to our conclusion that he should serve as a director of our Company. Michael R. Moynihan, Ph.D., Vice President of R&D Dr. Moynihan, age 60, has served as our Vice President of R&D since March 2011 and served as Vice President of R&D for 22nd Century Limited, LLC since January, 2007. He has also been a consultant for 22nd Century Limited, LLC since 1999. From 2001 to 2006 he served as Director of Biotechnology Development at Fundacion Chile and from 1995 to 2000 as Senior Project Director at InterLink Biotechnologies LLC. Dr. Moynihan holds a Bachelor of Science Degree in Biology from Brown University and a Master s Degree and Ph.D. in Biology from Harvard University. He previously served as a Visiting Research Fellow at the Institute for Molecular and Cellular Biology, Osaka University, Japan; a Postdoctoral Associate in the Section of Plant Biology, Cornell University; and a Postdoctoral Associate at the Center for Agricultural Molecular Biology, Rutgers University. Joseph Alexander Dunn, Ph.D., Director Dr. Dunn, age 59, has served as a Director since March 4, 2011. Dr. Dunn is currently Associate Dean for Research and Professor of Pharmaceutical Sciences at D Youville College of Pharmacy in Buffalo, New York and has served in this capacity since April 1, 2010. Dr. Dunn has also served as Chief Executive Officer of the National Center for Food and Agricultural Policy in Washington, D.C. since November 1, 2009 and as Chief Executive Officer and Director of Research at OmniPharm Research International, Inc., a drug company, and affiliated entities, Therex Technologies Inc., a drug company, and Therex LLC, a drug company, each located in Buffalo, New York since January, 1994. From May 1, 2008, until January 20, 2009, Dr. Dunn served as Deputy Under Secretary and from August 1, 2006, until April 30, 2008 Dr. Dunn served as Senior Scientific Advisor at the United States Department of Agriculture, Research, Education and Economics Mission Area in Washington, D.C. From December 1, 2006, until April 30, 2008 Dr. Dunn served as Executive Director of the United States Department of Agriculture NAREEE Advisory Board. From July, 1998 until July 1, 2006, Dr. Dunn served as Research Associate Professor in the Department of Oral Biology, School of Dental Medicine, at the State University of New York at Buffalo. Since June 1, 2010, Dr. Dunn has served as a member of the Board of Directors of Brothers of Mercy, Inc., a not-for-profit nursing and rehabilitation concern. Dr. Dunn holds a B.S. Degree in Medical Chemistry and a Ph.D. Degree in Pharmacology, both from the State University of New York at Buffalo School of Pharmacy. Dr. Dunn also served as a Postdoctoral Fellow in the Department of Pharmacology at Harvard Medical School and as a Staff Fellow at the National Institutes of Health, National Cancer Institute Laboratory of Cellular Carcinogenesis and Tumor Promotion. Dr. Dunn s extensive scientific and regulatory background led to our conclusion that he should serve as a director of our Company. James W. Cornell, Director Mr. Cornell, age 56, has served as a Director since March 4, 2011. Mr. Cornell is currently the President and Chief Executive Officer of Praxiis, LLC, an enterprise that provides support for clients in organizational change, leadership development and transactional advisory services. He has served in this capacity since October, 1988. Mr. Cornell is also the current Manager of Larkin Center Management, LLC, a real estate development company, and has served in this capacity since October 2010. From September 2006 until September 2010, Mr. Cornell served as Managing Director of New York New Jersey Rail, LLC, which is part of the national transportation rail system and moves rail freight by rail barge across New York City Harbor, and he now continues to serve as principal business advisor to that firm. From March 2005 until September 2008, Mr. Cornell served as the Chairman of the Board of Directors of New York Regional Rail Corp., which operates as a short-haul regional trucking company. From April 2006, until February 2007, Mr. Cornell served as Chief Restructuring Officer of Regus Industries, a waste management firm, and from January 2001 until November 2004, he served as Special Advisor to Pinkerton Government Services, Inc. and Securitas Nuclear and Government Services Unit, security services providers to the energy industry and government. Mr. Cornell holds a B.S. Degree in Business, Management, and Economics and an M.B.A. Degree, both from the State University of New York, Empire College. Mr. Cornell s extensive business management, strategy, and leadership experience led to our conclusion that he should serve as a director of our Company. Corporate Governance Board Leadership Structure As of the date hereof, the Board has not appointed a chairman or a lead independent director. At this time, the Board believes that this structure is appropriate for our Company because we have very few employees and are currently in the development phase for our products. In the future, we expect that the Board will appoint a chairman and, if appropriate, a lead independent director. Board Role in Risk Oversight Risk is inherent with every business and we face a number of risks. Management is responsible for the day-to-day management of risks we face, while our Board of Directors is responsible for overseeing our management and operations, including overseeing its risk assessment and risk management functions. Compensation Policies and Practices and Risk Management The Board considers, in establishing and reviewing our compensation philosophy and programs, whether such programs encourage unnecessary or excessive risk taking. Base salaries are fixed in amount and consequently the Board does not see them as encouraging risk taking. We also provide our executive officers and other senior managers long-term equity awards to help further align their interests with our interests and those of our stockholders. The Board believes that these awards do not encourage unnecessary or excessive risk taking since the awards are generally provided at the beginning of an employee's tenure or at various intervals to award achievements or provide additional incentive to build long-term value and are subject to vesting schedules to help ensure that executives and senior managers have significant value tied to our long-term corporate success and performance. The Board believes that our compensation philosophy and programs encourage employees to strive to achieve both short- and long-term goals that are important to our success and building stockholder value, without promoting unnecessary or excessive risk taking. The Board has concluded that our compensation philosophy and practices are not reasonably likely to have a material adverse effect on us. Code of Ethics In 2006, we adopted a Code of Ethics that applies to all of our employees. A copy of our Code of Ethics will be provided to any person requesting same without charge. To request a copy of our Code of Ethics, please make a written request to our Chief Executive Officer c/o 22nd Century Group, Inc., 9530 Main Street, Clarence, New York 14031. Number of Meetings of the Board of Directors The Board held four meetings during 2012. Directors are expected to attend Board meetings and to spend time needed to meet as frequently as necessary to properly discharge their responsibilities. Each director attended at least 75% of the aggregate number of meetings of the Board during 2012. Attendance at Annual Meetings of the Stockholders The Company has no policy requiring Directors and Director Nominees to attend its annual meeting of stockholders; however, all Directors and Director Nominees are encouraged to attend. All of our directors attended our 2012 annual meeting. Director Independence Joseph Alexander Dunn, Ph.D. and James W. Cornell each qualify as "independent" applying the NASDAQ Global Market definition of independent. Stockholder Communications Stockholders may send communications to the Company's directors as a group or individually, by writing to those individuals or the group: c/o the Chief Executive Officer c/o 22nd Century Group, Inc., 9530 Main Street, Clarence, NY 14031. The Chief Executive Officer will review all correspondence received and will forward all correspondence that is relevant to the duties and responsibilities of the Board or the business of the Company to the intended director(s). Examples of inappropriate communication include business solicitations, advertising and communication that is frivolous in nature, relates to routine business matters (such as product inquiries, complaints or suggestions), or raises grievances that are personal to the person submitting the communication. Upon request, any director may review communication that is not forwarded to the directors pursuant to this policy. Committees of the Board of Directors As of the date hereof, the Board has not established any committees of the Board. At this time, the Board believes that this structure is appropriate for our Company because we have very few employees and are currently in the development phase for our products. In the future, we expect that the Board will establish Board committees. Nominating Committee At of the date hereof, the Company does not have a nominating committee. The Company intends to adopt a nominating committee in the future. As of the date hereof, we do not have any defined policy or procedure requirements for stockholders to submit recommendations or nominations for directors. The Company does not currently have any specific or minimum criteria for the election of nominees to the Board, and does not have any specific process or procedure for evaluating such nominees. Our current Board assesses all candidates, whether submitted by management or stockholders, and makes recommendations for election or appointment. Audit Committee As of the date hereof, the role of audit committee is performed by the Board. In this capacity, the Board is responsible for: (i) selection and oversight of our independent accountants; (ii) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (iii) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (iv) engaging outside advisors; and (v) funding for the outside auditors and any outside advisors engaged by the Board. The Company has determined that James W. Cornell qualifies as an "audit committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K. From inception to present date, we believe that the members of our Board are collectively capable of analyzing and evaluating the Company s financial statements and understanding internal controls and procedures for financial reporting. Compensation Committee We have determined that the functions ordinarily handled by such a committee should be handled by our entire Board. Director Compensation Directors that are not members of management receive cash compensation of $10,000 each annually and in 2011 received restricted stock awards of 25,000 shares each which vested immediately. The following table sets forth information regarding the compensation of our non-executive directors for their service on our Board of Directors for fiscal year 2012: Non-Qualified Fees Earned Non-Equity Deferred or paid Stock Option Incentive Plan Compensation All Other Name in cash Awards Awards(1) Compensation Earnings Compensation Total James W. Cornell $10,000 - $35,400 - - - $45,400 Joseph A. Dunn, Ph.D. $10,000 - $35,400 - - - $45,400 (1) Represents the grant date fair value calculated pursuant to ASC Topic 718. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following assumptions were used: Risk-free interest rate 1.71% Expected dividend yield 0% Expected stock price volatility 90% Expected life of options 10 years Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our directors, executive officers, and stockholders holding more than 10% of our outstanding common stock to file with the SEC initial reports of ownership and reports of changes in beneficial ownership of our common stock. Executive officers, directors and greater-than-10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based on a review of the Securities and Exchange Commission filed ownership reports during 2012, the Company believes that all Section 16(a) filing requirements were met during 2012 except as set forth below: Joseph Pandolfino, Henry Sicignano III, Michael Moynihan and Charles Rider each filed a late Form 4 on May 21, 2012 reporting the acquisition of shares. Michael Moynihan filed a late Form 4 on August 24, 2012 reporting the sale of shares. Henry Sicignano III filed a late Form 4 on August 28, 2012 reporting the acquisition of shares. Joseph Pandolfino filed a late Form 4 on August 30, 2012 reporting the sale of shares. Joseph Dunn, James Cornell, Joseph Pandolfino and Henry Sicignano III each filed a late Form 4 on November 14, 2012 reporting the acquisition of shares. Executive Compensation The following table summarizes the compensation paid by us in each of the last two completed fiscal years ended December 31, 2012 for our principal executive officer and the two most highly compensated executive officers who received annual compensation in excess of $100,000. These officers are referred to herein as our "Named Executive Officers." Summary Compensation Table for Years Ended December 31, 2012 and 2011 Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) (1) Option Awards ($)(2) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) (3) Total ($) Joseph Pandolfino 2012 150,000 - 310,500 - - - 15,609 476,109 Chief Executive Officer 2011 150,000 - 102,000 - - - 6,646 258,646 Henry Sicignano III 2012 150,000 - 69,000 59,600 - - 16,286 294,886 Chief Financial Officer and President 2011 150,000 - 357,000 - - - 15,174 522,174 Michael R. Moynihan, Ph.D. 2012 115,000 - 85,474(4) 59,600 - - 9,239 269,313 Vice President of R&D 2011 111,290 - 51,000 - - - 8,613 170,903 (1) The amounts included in this column are the aggregate grant date fair value determined in accordance with FASB ASC 718. (2) Represents the grant date fair value calculated pursuant to ASC Topic 718. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following assumptions were used: Risk-free interest rate 1.71% Expected dividend yield 0% Expected stock price volatility 90% Expected life of options 10 years (3) Represents amounts paid by Company for health insurance. (4) Amount represents fair value of stock issued in excess of the carrying value of Dr. Moynihan s 4% interest in Goodrich Tobacco Company, LLC. Outstanding Equity Awards at 2012 Fiscal Year-End Option Awards Stock Awards Name Number of Securities Underlying Unexercised Options Exercisable (#) Number of Securities Underlying Unexercised Options Un- exercisable (#) Option Exercise Price Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#)(2) Market Value of Shares or Units of Stock That Have Not Vested ($)(2) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) Mr. Sicignano 100,000 - $0.69 5/18/2022 550,000(1) $415,250 - - Dr. Moynihan 100,000 - $0.69 5/18/2022 - - - - (1) 450,000 of the shares are time-based awards subject to vesting over the next 3 years on April 1 of 2013 to 2015, such that 150,000 shares shall vest on April 1 of each such year; 100,000 of the shares are performance based, which are subject to forfeiture unless certain performance milestones are achieved. (2) Market value calculated based on the price of our common stock as of the last business day of our fiscal year. Agreements with Executive Officers We have entered into employment agreements with each of Messrs. Pandolfino and Sicignano that provide for annual compensation of $150,000 and $150,000, respectively, subject to increases as contained in such employment agreements and/or as decided by our Board of Directors. Dr. Moynihan has an employment agreement with 22nd Century Group, Inc. that provides for annual compensation of $115,000. These employment agreements also contain non-compete covenants and change of control provisions. The employment agreement of Messrs. Pandolfino and Sicignano provides that during the executive officer s employment by us and for a period of two (2) years after the executive officer ceases to be employed by us, the following non-compete covenants will apply: (i) the executive officer will not (except on behalf of us) provide or offer to provide any goods or services to any entity engaged in the United States in the making, offering, marketing, distributing and/or selling of products made from the tobacco (Nicotiana) plant, and/or providing or offering to provide the same or substantially similar services to any customer or prospective customer, (ii) the executive officer will not interfere with our relationships with any customer, prospective customer, supplier, distributor, farmer and/or manufacturer, and (iii) the executive will not induce or attempt to induce any persons employed by us to leave their employment with us, nor hire or employ, or attempt to hire or employ, any persons employed by us, nor assist or facilitate in any way any other person or entity in the hiring of any persons employed by us. The employment agreement of Dr. Moynihan contains the same non-compete covenants but they are in effect for a period of three (3) years after the executive officer ceases to be employed by us. Dr. Moynihan s employment agreement contains a severance provision which provides that upon the termination of his employment without Cause (as defined in his employment agreement), Dr. Moynihan will receive severance compensation equal to the base salary then in effect beginning on the date of termination and continuing until the later of one year following termination or the expiration of the initial term of his employment agreement. The employment agreements of Messrs. Pandolfino and Sicignano provide that in the event of a change in control (as defined in the employment agreements) of our Company, then during the three (3)-year period following such change in control if certain triggering events occur as defined in such employment agreements, such as if the executive is terminated other than for cause (as defined in each of the employment agreements), death or disability, or if the executive officer s responsibilities are diminished after the change in control as compared to the executive officer s responsibilities prior to the change in control, or if the executive officer s base salary or benefits are reduced, or the executive is required to relocate more than twenty-five (25) miles from his current place of employment, then in any such events the executive officer will have the option, exercisable within ninety (90) days of the occurrence of such an event, to resign his employment with us, in which case the executive officer will be entitled to receive: (A) the greater of either his base salary for the then remaining portion of the initial 5-year term of the agreement or his base salary for three (3) years thereafter; (B) reimbursement for eighteen (18) months of his reasonable costs for medical, dental, life, disability and other benefits and insurance coverage that the executive officer received during his employment; (C) outplacement services for two (2) years; and (D) the immediate vesting of all options and/or restricted stock grants previously granted or to be granted to the executive officer. We also provide each of these individuals with health insurance and vacation benefits. Equity Incentive Plan On October 21, 2010, we established the EIP for officers, employees, Directors, consultants and advisors to the Company and its affiliates, consisting of 4,250,000 shares of common stock reserved for issuance under the EIP. The EIP has a term of ten years and is administered by our Board or a committee to be established by our Board, to determine the various types of incentive awards that may be granted to recipients under this plan, such as stock grants, stock options, stock appreciation rights, performance share awards, restricted stock and restricted stock units, and the number of shares of common stock to underlie each such award under the EIP. Certain Relationships and Related Transactions Policies and Procedures for Related Party Transactions Our Board is in the process of adopting a written related person transaction policy, which will set forth the policies and procedures for the review and approval or ratification of related person transactions. This policy will be administered by our Board and covers any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, where the amount involved exceeds $50,000 and a related person had or will have a direct or indirect material interest. While the policy covers related person transactions in which the amount involved exceeds $50,000, the policy states that related person transactions in which the amount involved exceeds $120,000 are required to be disclosed in applicable filings as required by the Securities Act, the Exchange Act and related rules. Our Board set the $50,000 threshold for approval of related party transactions in the policy at an amount lower than that which is required to be disclosed under the Securities Act, the Exchange Act and related rules because we believe it is appropriate for our Board to review transactions or potential transactions in which the amount involved exceeds $50,000, as opposed to $120,000. Pursuant to this policy, our Board will: (i) review the relevant facts and circumstances of each related person transaction, including if the transaction is on terms comparable to those that could be obtained in arm s length dealings with an unrelated third party and the extent of the related person s interest in the transaction, and (ii) take into account the conflicts of interest and corporate opportunity provisions of our code of business conduct and ethics. Management will present to our Board each proposed related person transaction, including all relevant facts and circumstances relating thereto, and will update the Board as to any material changes to any related person transaction. All related person transactions may only be consummated if our Board has approved or ratified such transactions in accordance with the guidelines set forth in the policy. Certain types of transactions have been pre-approved by our Board under the policy. These pre-approved transactions include: (i) certain compensation arrangements; (ii) transactions in the ordinary course of business where the related person s interest arises only (a) from his or her position as a director of another entity that is party to the transaction, and/or (b) from an equity interest of less than 5% in another entity that is party to the transaction, or (c) from a limited partnership interest of less than 5%, subject to certain limitations; and (iii) transactions in the ordinary course of business where the interest of the related person arises solely from the ownership of a class of equity securities in our Company where all holders of such class of equity securities will receive the same benefit on a pro rata basis. No director may participate in the approval of a related person transaction for which he or she is a related person. Related Party Transactions Immediately prior to the closing of the Merger in January 2011 between the Company (then known as Touchstone Mining Limited) and 22nd Century Limited, LLC, pursuant to the terms of the Split-Off Agreement, the Company transferred all of our pre-merger operating assets and liabilities to the Split-Off Subsidiary. We then transferred all of the outstanding capital stock of the Split-Off Subsidiary to David Rector, our sole director and executive officer prior to the merger, in exchange for $1, such consideration was deemed to be adequate by our Board prior to the merger. Prior to the closing of the merger, we paid Mr. Rector $1,500 in consideration for his service as our sole director and executive officer. Prior to the closing of the Merger, Touchstone Mining Limited utilized office space located at 11923 SW 37 Terrace, Miami, Florida 33175 that was provided to us on a rent-free basis by Nanuk Warman, a former director and executive officer. Also, prior to the closing of the merger, we cancelled 10,015,200 shares of our common stock held by Mr. Warman and entered into a mutual release agreement with Mr. Warman regarding such cancellation. In each of fiscal years 2009 and 2010, we paid Mr. Warman aggregate compensation of $8,000 in consideration for his services as our sole director and executive officer during those periods. We also paid Mr. Warman aggregate of $1,500 in consideration for his accounting services in preparation of our most recent Form 10-K and Form 10-Q filed prior to the closing of the merger. We have conducted transactions with Alternative Cigarettes, Inc. ("AC"), which is 95% owned by three holders of our common stock, including Joseph Pandolfino, our Chief Executive Officer, and Angelo Tomasello, who beneficially owned approximately over 10% of our common stock. We previously shared office space and employee services with AC. AC has also advanced funds to us from time to time. Since January 1, 2010, the largest net amount due from us to AC was approximately $127,000. No interest has been accrued or paid on these amounts due to AC and there are no repayment terms between the parties. In February 2011, AC was paid $22,500 by 22nd Century Ltd for AC s assignment of its MAGIC trademark to 22nd Century Limited, LLC and other minor assets. In January 2008, we issued convertible promissory notes due and payable on January 15, 2011 to Messrs. Pandolfino and Tomasello in the principal amounts of $77,435 and $100,315, respectively, with 7% interest per annum accruing thereon. In December 2009, Mr. Pandolfino converted the principal balance and accrued interest under his note ($88,172) into 151,760 shares of our common stock. In May 2010, Mr. Tomasello agreed to amend his note to eliminate his right to convert the balance into shares of our common stock, and in January 2011, Mr. Tomasello s note together with all accrued interest thereon was paid in full. In November 2008, we issued a promissory note due and payable on November 11, 2010 to Mr. Tomasello in the principal amount of $325,000, with 10% interest per annum accruing thereon, and a warrant to purchase 371,006 shares of our common stock, which have since been exercised at a price of $.0001 per share. The note was guaranteed by Virgil Properties, LLC, which is jointly owned by Messrs. Pandolfino and Tomasello. Effective December 1, 2010, the $325,000 promissory note was amended to extend the maturity date until January 10, 2011 and to increase the interest rate to 15% during this extension period. On January 25, 2011, Mr. Tomasello converted the principal amount of this promissory note into 325,000 shares of our common stock through an investment in the Private Placement Offering and cash in the amount of $79,401, which represents the accrued interest on the original $325,000 promissory note. Mr. Tomasello has also made funds available to us in the form of cash advances. The largest net amount outstanding since January 1, 2009 was approximately $166,000. No interest was accrued or paid on such advances and there were no repayment terms between the parties. In December 2009, Mr. Tomasello was issued 504,553 shares of our common stock in lieu of repayment of $135,996 of such advances, and we issued him a promissory note in the amount of $30,054 that was exchanged for 204,639 shares of our common stock in June 2010. On December 14, 2011 Mr. Tomasello acquired $28,750 of our December 14, 2011 Convertible Notes for $25,000 cash. In December 2012, Mr. Tomasello extended the maturity date of his December 14, 2011 Convertible Note to April 9, 2013. In January 2013, he converted his note. During the period between January 1 and October 5, 2010, we issued Mr. Pandolfino 455,331 shares of our common stock in lieu of $103,573 due and payable to him for his services. On October 5, 2010, we issued Mr. Pandolfino a promissory note, which was assigned to Mr. Sicignano, due and payable on January 31, 2011 in the principal amount of $58,873, with 15% interest per annum accruing thereon. In January 2011, we made payment in full to Mr. Sicignano on this assigned note together with all accrued interest thereon. Mr. Pandolfino acquired $86,250 of the December 14, 2011 Convertible Notes for $75,000 in cash. In 2012, he converted his Convertible Note. In September 2010, Henry Sicignano III, our President, Secretary and interim Chief Financial Officer, loaned us $35,000, which amount was due and payable in November 2010, with 15% interest per annum accruing thereon. On December 14, 2010, Mr. Sicignano agreed to extend the maturity date of this loan until January 25, 2011. On December 28, 2010 we issued a promissory note to Mr. Sicignano due and payable on January 15, 2011 in the principal amount of $100,000, with 15% interest per annum accruing thereon. From time to time, Mr. Sicignano deferred guaranteed payments due to him by us as consideration for his services as our President with the largest net amount of such deferred guaranteed payments outstanding since January 1, 2010 being $85,000. On January 28, 2011 we made payment in full to Mr. Sicignano of all deferred guaranteed payments and all principal and accrued interest on all promissory notes then outstanding. Mr. Sicignano is also the managing member of Henry Sicignano III Group, LLC ("Sicignano Group"). On October 5, 2010, Sicignano Group purchased 112,396 shares of our common stock for $30,295 and, in a simultaneous related transaction, made a loan to the Company in the principal amount of $30,295, with 15% interest per annum accruing thereon, for which we issued Sicignano Group a promissory note due and payable on January 31, 2011. On January 25, 2011, Sicignano Group converted the principal amount of this promissory note and the accrued interest thereon into 31,626 shares of our common stock through an investment in the Private Placement Offering. From June 30, 2011 to October 18, 2011, Mr. Sicignano loaned us a total of $215,000 and Mr. Sicignano was issued a promissory note with interest at 12%. Mr. Sicignano exchanged these notes to acquire $247,250 of our December 14, 2011 Convertible Notes. In December 2012, Mr. Sicignano agreed to forebear on the collection of our December 14, 2011 Convertible Cotes. On January 22, 2013, we paid Mr. Sicignano the total amount of $250,696 in principal plus accrued but unpaid interest as payment in full of the December 14, 2011 Convertible Notes owned by Mr. Sicignano. On that same date of January 22, 2013, Mr. Sicignano loaned us $150,000 and we issued a promissory note to Mr. Sicignano due and payable on July 1, 2013 in the principal amount of $150,000, with 15% interest per annum accruing thereon. On September 15 and October 15, 2009, we issued promissory notes payable to Clearwater Partners, LLC ("Clearwater") in the amounts of $15,000 and $10,000, respectively. In conjunction with the $15,000 promissory note, a warrant to purchase 185,503 shares of our common stock, at a price per share of less than $.0001, was issued to Clearwater, and in conjunction with the $10,000 note, a warrant to purchase 92,751 shares of our common stock, at a price per share of less than $.0001, was issued to Clearwater. The promissory notes bear interest at a rate of 10%. These promissory notes had original maturity dates September 15, 2010 and October 15, 2010, respectively. On May 27, 2010, the maturity dates of both promissory notes were extended to January 31, 2012 and subsequently paid in June 2012. On March 1, 2010, we issued a four (4) year warrant to purchase 1,706,626 shares of our common stock to Clearwater, which was exercised in full on May 27, 2010, at a price per share of $0.0001. On May 27, 2010, we further issued to Clearwater an additional four (4) year warrant to purchase 1,409,821 shares of our common stock, which was immediately exercised in full at a price per share of $0.0001, and we issued to Clearwater a promissory note due and payable on January 31, 2012 in the principal amount of $45,000, with 10% interest per annum accruing thereon. These warrants and this promissory note were issued to Clearwater in lieu of repayment of $450,000 principal, and accrued interest thereon, of funds previously advanced to us by Clearwater. On October 5, 2010, Clearwater purchased 176,358 shares of our common stock for $47,535 and, in a simultaneous related transaction, made a loan to the Company in the principal amount of $47,535, with 15% interest per annum accruing thereon, for which we issued Clearwater a promissory note due and payable on January 31, 2011. On January 25, 2011, Clearwater converted the principal amount of this $47,535 promissory note and the accrued interest thereon, and the principal amount of the $45,000 promissory note and the accrued interest thereon, due and payable on January 31, 2012, into 97,544 shares of our common stock through an investment in the Private Placement Offering. On December 14, 2011, Mr. Pandolfino, our Chief Executive Officer, Mr. Sicignano, our President and interim Chief Financial Officer, and Mr. Rider, our former Chief Financial Officer, acquired $86,250, $247,250 and $34,500, respectively, of our December 14, 2011 Convertible Notes. The purchase price for the Convertible Notes was 85% of the face amount of the notes. Mr. Pandolfino converted his December 14, 2011 Convertible Note in February 2011 into 115,000 shares of our common stock and warrants to purchase 138,000 shares of our common stock. In December 2012, Mr. Sicignano agreed to forebear on the collection of our December 14, 2011 convertible notes. On January 22, 2013, we paid Mr. Sicignano the total amount of $250,696 in principal plus accrued but unpaid interest as payment in full of the December 14, 2011 Convertible Notes owned by Sicignano. On that same date of January 22, 2013, Mr. Sicignano loaned us $150,000 and we issued a promissory note to Mr. Sicignano due and payable on July 1, 2013 in the principal amount of $150,000, with 15% interest per annum accruing thereon. In December 2012, Mr. Rider extended the maturity date of his December 14, 2011 Convertible Note to April 9, 2013. In January 2013, he converted his note. On March 21, 2012 and April 13, 2012, Rockledge Capital, LLC, a company of which our President, Mr. Sicignano, is the manager, loan us $25,000 on each of these dates; such notes were due and payable on October 1, 2012, with 15% interest per annum accruing thereon. These notes were paid in full on January 22, 2013. On May 15, 2012, Mr. Pandolfino, our Chief Executive Officer, Mr. Sicignano, our President and interim Chief Financial Officer, Mr. Rider, our former Chief Financial Officer, and Dr. Moynihan, our Vice President of Research and Development, acquired 12,000, 20,000, 12,000, and 150,000 shares of the Company s common stock, $0.00001 par value, respectively, and the same number of warrants with a 5-year term to purchase shares of our common stock at an exercise price of $1.00 per share, which exercise price was subsequently adjusted pursuant to the terms of the warrants to be $0.60 per share as of January 22, 2013. The purchase price was $0.60 per unit. Dr. Moynihan exchanged his minority interest in Goodrich Tobacco (4 units equating to 4%) for stock and warrants valued at $90,000 in the May 15, 2012 private placement. Dr. Moynihan s transaction resulted in Goodrich Tobacco becoming a wholly owned subsidiary of 22nd Century, Ltd. In October 2012, we entered into a contractor agreement with Angelo Tomasello to provide consulting services to the Company. For consideration under the agreement, Mr. Tomasello was issued 20,000 stock options with the exercise price of $0.26, which is equivalent to the closing price on our common stock on October 26, 2012. The options vested on October 26, 2012 and are exercisable any time through the expiration date ten years hence. On November 9, 2012, Mr. Pandolfino, our Chief Executive Officer, Mr. Sicignano, our President and interim Chief Financial Officer, Mr. Cornell, our director, and Mr. Dunn, our director, participated in our private placement and acquired 480,000, 600,000, 60,000 and 60,000 shares of our common stock, $0.00001 par value, respectively, and warrants with a 5-year term to purchase up to 240,000, 300,000, 30,000 and 30,000 shares of the Company s common stock, respectively, at an exercise price of $1.00 per share, which exercise price was subsequently adjusted pursuant to the terms of the warrants to be $0.60 per share as of January 22, 2013. The purchase price was $0.25 per unit. Plan of Distribution Each selling stockholder (the "Selling Stockholders") of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the OTC Bulletin Board or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling securities: ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; purchases by a broker-dealer as principal and resale by the broker-dealer for its account; an exchange distribution in accordance with the rules of the applicable exchange; privately negotiated transactions; settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part; in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security; through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; a combination of any such methods of sale; or any other method permitted pursuant to applicable law. The Selling Stockholders may also sell securities under Rule 144 under the Securities Act, if available, rather than under this prospectus. Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440. In connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). The Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%). The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. Because Selling Stockholders may be deemed to be "underwriters" within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities by the Selling Stockholders. We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with. Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of securities of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act). Description of Securities General Our authorized capital stock consists of 300,000,000 shares of common stock and 10,000,000 shares of preferred stock, of which 38,259,365 shares of common stock are issued and outstanding and 2,500 shares of Series A-1 Preferred Stock are issued and outstanding. We will also have reserved (i) up to 4,166,666 shares of common stock that could be initially issued as a result of the conversion of the shares of Series A-1 Preferred Stock, which is subject to adjustment as described below, (ii) up to 950,000 shares of common stock for future issuance under the EIP, (iii) up to 680,000 shares of common stock issuable upon exercise of outstanding stock options; (iv) up to 371,000 shares of common stock currently issuable upon the conversion of convertible notes; (v) up to 22,343,082 shares of common stock currently issuable upon the exercise of outstanding warrants (including the Series A Warrants and Series B Warrants) (subject to adjustment for anti-dilution adjustments); and (vi) up to 2,454,334 shares of common stock issuable upon exercise of warrants issuable upon conversion or exercise of other instruments (including the Series C Warrants) (subject to adjustment for anti-dilution adjustments). The following summary of certain provisions of our capital stock does not purport to be complete and is subject to and is qualified in its entirety by our articles of incorporation, including the Certificate of Designations thereto, and by-laws, the warrants and notes referred to below. Common Stock Holders of common stock are entitled to one (1) vote per share with respect to each matter presented to our stockholders on which holders of common stock are entitled to vote. The common stock does not have cumulative voting rights. No share of common stock affords any preemptive rights or is convertible, redeemable, assessable or entitled to the benefits of any sinking or repurchase fund. Subject to the prior rights of holders of preferred stock, holders of common stock are entitled to receive dividends as may be lawfully declared from time to time by our board of directors. Upon our liquidation, dissolution or winding up, whether voluntary or involuntary, holders of common stock will be entitled to receive such assets as are available for distribution to our shareholders after there shall have been paid, or set aside for payment, the full amounts necessary to satisfy any preferential or participating rights to which the holders of each outstanding series of preferred stock are entitled by the express terms of the applicable series. The common stock is quoted on the OTC Bulletin Board under the symbol "XXII.OB." Preferred Stock Our Board is authorized, without action by our stockholders, to designate and issue up to an aggregate of 10,000,000 shares of preferred stock in one or more series. Our board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. An aggregate of 2,500 shares of our Series A-1 Preferred Stock are currently outstanding. The shares of Series A-1 Preferred Stock are initially convertible into a total of 4,166,666 shares of the Company s common stock at a conversion price of $0.60 per share (referred to in this section as the Conversion Price), subject to future adjustments as described below. Holders of our Series A-1 Preferred Stock may only convert the Series A-1 Preferred Stock to the extent that, after giving effect to the conversion, such holder (together with such holder s affiliates) would beneficially own no more than 9.99% of number of shares of our outstanding common stock. The Conversion Price of the Series A-1 Preferred Stock is subject to adjustment as follows: (i)on the effective date of this registration statement, the Conversion Price will be reduced to the lesser of (1) the then Conversion Price, as adjusted and taking into consideration any prior resets, (2) the greater of $0.35 (subject to adjustment for reverse and forward stock splits and the like) and 70% of the average of the five (5) trading day volume weighted average prices, or VWAPs, immediately prior to each such effective date or (3) $0.60 (subject to adjustment for forward and reverse stock splits and the like); (ii)if on the 180th day immediately following the closing date of January 11, 2013 (the "Closing Date"), 70% of the average of the five (5) trading day VWAPs immediately prior to such date is less than the then Conversion Price, then on such 180th day the Conversion Price shall be reduced, and only reduced, to the lesser of (1) the then Conversion Price, as adjusted and taking into consideration any prior resets, (2) the greater of $0.15 (subject to adjustment for reverse and forward stock splits and the like) and 70% of the average of the five (5) trading day VWAPs immediately prior to each such 180th day immediately following the Closing Date or (3) $0.35 (subject to adjustment for forward and reverse stock splits and the like); and (iii)if all of the shares required to be registered are not registered pursuant to an effective registration statement within the 120th day anniversary of the Closing Date, then on the 180th day and 270th day following the Closing Date, the Conversion Price shall be reduced, and only reduced, to the lesser of (1) the then Conversion Price, as adjusted and taking into consideration any prior resets, (2) the greater of $0.15 (subject to adjustment for reverse and forward stock splits and the like) and 70% of the average of the five (5) trading day VWAPs immediately prior to each such date or (3) $0.35 (subject to adjustment for forward and reverse stock splits and the like). The Series A-1 Preferred Stock will pay a 10.0% annual cash dividend, which may be payable in shares of our common stock, and will have a liquidation preference equal to the stated value of the Series A-1 Preferred Stock of $1,000 per share plus any accrued and unpaid dividends thereon. The Series A-1 Preferred Stock has no voting rights. With respect to the payment of dividends and amounts upon liquidation, the Series A-1 Preferred Stock will rank senior to any other future series of our preferred stock and all classes of our common stock. Unless full dividends on the Series A-1 Preferred Stock have been paid for all past dividend periods, no distribution may be declared or paid on our common stock or any other capital shares that rank junior to the Series A-1 Preferred Stock as to dividends. In the event of the Company's liquidation, dissolution or winding up, the holders of the Series A-1 Preferred Stock are entitled to be paid out of our assets legally available for distribution to its shareholders a liquidation preference of the stated value of $1,000 per share, plus an amount equal to any accumulated and unpaid dividends to the date of payment before any distribution of assets is made to holders of our common stock or any other capital shares that rank junior to the Series A-1 Preferred Stock as to liquidation preference. The Series A-1 Preferred Stock contains standard anti-dilution adjustments in the event of a stock dividend, stock split or similar corporate transaction. In addition, if, at any time while shares of Series A-1 Preferred Stock are outstanding, we sell any common stock (or securities issuable into common stock) or grant any option to purchase any common stock at an effective price per share that is lower than the then Conversion Price, which we refer to as a Diluting Issuance, then the Conversion Price shall be reduced to equal the effective price per share (as determined pursuant to the Certificate of Designation) of the Diluting Issuance. No adjustments will be made for shares of common stock or options granted to employees, officers or directors under our Equity Incentive Plan, upon conversion or exchange of any securities outstanding as of the time of the issuance of the Series A-1 Preferred Stock or in connection with certain business combinations. In the event we (i) declare dividends on our common stock, (ii) grant any right to acquire common stock or other property pro rata to all of our holders of our common stock or (iii) enter into a fundamental transaction that provides for consideration to the holders of our common stock, then the Series A-1 Preferred Stock shall have the right to participate on a pro rata as-converted basis without regard to the 9.99% beneficial ownership limitation. Generally, we may not redeem the Series A-1 Preferred Stock. However, upon the occurrence of certain triggering events described below, holders of Series A-1 Preferred Stock will have the right to redeem some or all of their Series A-1 Preferred Stock for cash or shares of our common stock, or increase the dividend rate on any of their outstanding shares of Series A-1 Preferred Stock to 18% per annum thereafter. If we fail to pay the cash or shares of our common stock due upon such redemption, then we must pay interest thereon at a rate of 18% per annum (or such maximum rate permitted by applicable law, whichever is lower). Triggering events for redemption of our Series A-1 Preferred Stock by the holders thereof include the following: if we fail to deliver certificates representing the shares of common stock into which the Series A-1 Preferred Stock may be converted prior to the fifth trading day after such certificates are required to be delivered; if we provide notice that we do not intent to comply with the requests of any conversion of shares of Series A-1 Preferred Stock; if we fail to pay in full the amount of cash due pursuant to a buy-in (in the event we fail to deliver shares of common stock upon conversion of the Series A-1 Preferred Stock and the holder of Series A-1 Preferred Stock is required by its brokerage firm to purchase in an open market transaction or otherwise shares of common stock to deliver in satisfaction of a sale by such holder of the shares of common stock that were to have been converted from Series A-1 Preferred Stock) within five calendar days after notice of such buy-in; if we fail to pay in full all amounts owed on account of any event of default under the Registration Rights Agreement; if we fail to have a sufficient number of authorized and unreserved shares of common stock to issue upon conversion of our Series A-1 Preferred Stock; if we fail to observe or perform any other covenant, agreement, or warranty contained in or otherwise commit any breach of any of our Certificate of Designation for Series A-1 Preferred Stock, the Purchase Agreement, the Warrants, the Registration Rights Agreement, the escrow agreement entered into in connection with the Purchase Agreement, or the lock-up agreements entered into in connection with the Purchase Agreement, and such failure or breach continues past any applicable cure date; if we redeem more than a de minimis number of our common stock other than in connection with repurchases of our common stock from departing officers and directors in an amount not to exceed, in aggregate, $100,000; if there is a change in control of more than forty percent (40%) of the voting securities other than by means of conversion of our Series A-1 Preferred Stock, or a merger, consolidation, or sale of assets occurs and the stockholders existing prior to such transaction retain less than sixty percent (60%) of the voting power following such transaction, or if more than one half of the members of the board of directors are replaced in any given year and such replacement is not approved by a majority of the individuals who are currently on the board of directors; if we experience certain bankruptcy related events; if our common stock fails to be listed or quoted for trading on a trading market for more than five trading days; or if any monetary judgment or write is entered or filed against us for more than $50,000 and such judgment or writ remains unvacated, unbonded or unstayed for 45 days. The Series A-1 Preferred Stock has been issued subject to certain negative covenants described below, which are restrictions on the Company that will remain in effect for as long as any shares of Series A-1 Preferred Stock are outstanding, unless the holders of at least 67% in stated value of the then outstanding shares of Series A-1 Preferred Stock have otherwise given prior written consent. These negative covenants include the following: other than indebtedness permitted pursuant to the Certificate of Designations and until less than 1,000 shares of Series A-1 Preferred Stock remain outstanding, we may not issue, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any kind on any of our property or assets; other than liens permitted pursuant to the Certificate of Designations, we may not enter into, create, incur, assume or suffer to exist any liens of any kind on our property or assets; we may not amend our charter documents, including, without limitation, our certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights of the holders of our Series A-1 Preferred Stock; we may not repay or repurchase or otherwise acquire more than a de minimis number of shares of our common stock other than in connection with (i) the conversion of our Series A-1 Preferred Stock or exercise of the Warrants and (ii) repurchases of common stock of departing officers and directors, provided that such repurchases shall not exceed an aggregate of $100,000 for all officers and directors for so long as the Series A-1 Preferred Stock is outstanding; we may not pay cash dividends or distributions on our common stock; and we may not enter into any transaction with any of our affiliates which would be required to be disclosed in any public filing with the SEC, unless such transaction is made on an arm s-length basis and expressly approved by a majority of disinterested members of our board of directors (even if constituting less than a quorum otherwise required for board approval). No share of Series A-1 Preferred Stock affords any preemptive rights or is assessable or entitled to the benefits of any sinking or repurchase fund. Warrants and Convertible Notes Warrants Issued in Connection with our January 25, 2011 Private Placement Offering Investor Warrants. We issued five-year warrants to purchase 2,717,223 shares of our common stock, at an exercise price of $1.50 per share, in exchange for the warrants contained in the securities purchased by investors in our January 25, 2011 Private Placement Offering. These warrants may be exercised on a cashless basis in certain circumstances. The exercise price and number of shares of our common stock issuable upon exercise of the warrants may be adjusted in certain circumstances, including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. These warrants also provide holders with weighted-average anti-dilution price protection. No fractional shares will be issued upon exercise of these warrants. If, upon exercise of these warrants, a holder would be entitled to receive a fractional interest in a share, we may, in our discretion, upon exercise, round up to the nearest whole number of shares of our common stock to be issued to the warrant holder or otherwise equitably adjust the exercise and exercise price per share. Of the warrants described above, as of March 15, 2013, warrants to purchase 2,983,992 shares of our common stock are outstanding and the current exercise price is $1.3659, subject to future adjustments. Century Warrants. We issued five-year warrants to purchase 5,000,000 shares of our common stock, at an exercise price of $3.00 per share, in exchange for the warrants held by the members of 22nd Century prior to the consummation of the January 25, 2011 Private Placement Offering. These warrants may be exercised on a cashless basis in certain circumstances. The exercise price and number of shares of our common stock issuable upon exercise of the warrants may be adjusted in certain circumstances, including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. These warrants also provide holders with weighted-average anti-dilution price protection. No fractional shares will be issued upon exercise of these warrants. If, upon exercise of these warrants, a holder would be entitled to receive a fractional interest in a share, we may, in our discretion, upon exercise, round up to the nearest whole number of shares of our common stock to be issued to the warrant holder or otherwise equitably adjust the exercise and exercise price per share. Of the warrants described above, as of March 15, 2013, warrants to purchase 5,615,454 shares of our common stock are outstanding and the current exercise price is $2.6712, subject to future adjustments. Conversion Warrants. We issued five-year warrants to purchase an aggregate of 434,755 shares of our common stock, at an exercise price of $1.50 per share, in exchange for the warrants issued to the placement agent and sub-placement agent in the January 25, 2011 Private Placement Offering. These warrants contain a cashless exercise provision. The exercise price and number of shares of our common stock issuable upon exercise of the warrants may be adjusted in certain circumstances, including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. These warrants also provide holders with weighted-average anti-dilution price protection. No fractional shares will be issued upon exercise of these warrants. If, upon exercise of these warrants, a holder would be entitled to receive a fractional interest in a share, we may, in our discretion, upon exercise, round up to the nearest whole number of shares of our common stock to be issued to the warrant holder or otherwise equitably adjust the exercise and exercise price per share. Of the warrants described above, as of March 15, 2013, warrants to purchase 477,438 shares of our common stock are outstanding and the current exercise price is $1.3659, subject to future adjustments. Advisor Warrants. We issued five-year warrants to purchase 500,000 shares of our common stock, at an exercise price of $1.50 per share, to the placement agent in the January 25, 2011 Private Placement Offering. These warrants contain a cashless exercise provision. The exercise price and number of shares of our common stock issuable upon exercise of the warrants may be adjusted in certain circumstances, including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. These warrants also provide holders with weighted-average anti-dilution price protection. No fractional shares will be issued upon exercise of these warrants. If, upon exercise of these warrants, a holder would be entitled to receive a fractional interest in a share, we may, in our discretion, upon exercise, round up to the nearest whole number of shares of our common stock to be issued to the warrant holder or otherwise equitably adjust the exercise and exercise price per share. Of the warrants described above, as March 15, 2013, warrants to purchase an aggregate of 549,089 shares of our common stock are outstanding and the current exercise price is $1.3659, subject to future adjustments. Convertible Notes Issued in December 2011 and Related Warrants On December 14, 2011, we entered into an agreement with certain accredited investors, whereby such investors acquired approximately $1.9 million of convertible promissory notes of the Company. The notes were issued with an original issue discount of approximately 15%. The notes were convertible into shares of our common stock at any time prior to maturity of the note at a per share conversion price equal to $0.75. These Convertible Notes provided holders with weighted-average anti-dilution price protection. Additionally, upon conversion of all or a portion of the note into our common stock, each investor would receive at that time a warrant to purchase such number of shares of common stock equal to 120% of such number of shares of common stock issuable upon conversion of the note, with the these warrants having an exercise price of $1.50 per share. These warrants, after issuance, also provide holders with weighted-average anti-dilution price protection. No fractional shares will be issued upon exercise of these warrants. All of the Convertible Notes issued on December 14, 2011 have been either converted or paid off in full subsequent to December 31, 2012. At December 31, 2012 notes with a total face and carrying value of $1,805,500 remained outstanding; of this amount $1,523,750 were extended, by agreement with the note holders, to April 14, 2013 at 15% interest per annum. From January 1, 2013 to February 6, 2013, $1,408,750 of the notes (together with accrued interest), with an adjusted conversion price of $0.7004 were converted into 2,035,720 shares of common stock and five-year warrants to purchase 2,662,769 shares of common stock at $1.50 per share; the Company discharged the remaining note principal of $396,750 by payment in cash of $339,250 and issuing a new note of $57,500 maturing in August 2013. A $247,250 note held by an executive officer and another note of $30,000 were discharged through payments in cash. Subsequent to this repayment, the Company issued a promissory note to the executive officer in the amount of $150,000, with 15% interest per annum and maturing on July 1, 2013. A third note of $115,000 plus interest was discharged through a payment of $58,340 in conjunction with a new note being issued for the same amount. In connection with the issuance of preferred shares in January 2013, the note holders entered into a lock-up agreement with the Company which limits their ability to sell any of the shares received as a result of the conversion of the notes and received additional warrants (five year term at $1.50 exercise price) to purchase 239,900 shares of common stock. The warrants issued upon conversion of the notes have a term of five years and are exercisable at any time on or before the fifth anniversary of the issue date of the warrants. The warrants may be exercised on a cashless basis. The exercise price and number of shares of our common stock issuable upon exercise of the warrants may be adjusted in certain circumstances, including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation Warrants Issued in 2012 On May 15, 2012, we entered into an agreement with certain accredited investors, whereby the investors acquired warrants with a 5-year term to purchase up to 1,710,833 shares of our common stock at an exercise price of $1.00 per share. The exercise price and number of shares of our common stock issuable upon exercise of the warrants may be adjusted in certain circumstances, including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. These warrants also provide holders with weighted-average anti-dilution price protection. No fractional shares will be issued upon exercise of these warrants. Of the warrants described above, as of March 15, 2013, warrants to purchase an aggregate of 1,847,050 shares of common stock are outstanding and the exercise price has been reduced to $0.60 per share, subject to future adjustment, due to the issuance of the convertible notes issued on August 9, 2012, with such amount including warrants to purchase 124,217 shares of common stock that were the result of inducements granted to the holders of such convertible notes to execute the lock-up agreements described below. On November 9, 2012, we entered into an agreement with certain accredited investors, whereby the investors acquired warrants with a 5-year term to purchase up to 1,619,000 shares of our common stock at an exercise price of $1.00 per share. The exercise price and number of shares of our common stock issuable upon exercise of the warrants may be adjusted in certain circumstances, including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. These warrants also provide holders with anti-dilution price protection. No fractional shares will be issued upon exercise of these warrants. Of the warrants described above, as of March 15, 2013, warrants to purchase an aggregate of 1,672,950 shares of common stock are outstanding and the exercise price has been reduced to $0.60 per share, subject to future adjustment, due to the issuance of the Series A-1 Preferred Stock on January 11, 2013, with such amount including warrants to purchase 53,950 shares of common stock that were the result of inducements granted to the holders of the Convertible Notes to execute the lock-up agreements described below. Convertible Notes Issued in August 2012 On August 9, 2012, we completed a private placement of $222,600 of convertible notes, which were sold at a 6% discount. We received proceeds of $210,000. The face amount of the notes may be converted into common stock at the rate of $0.60 per share at the option of the note holder. In the event a holder of the convertible notes elects to convert the note into shares of common stock, then the holder shall receive 371,000 warrants representing one-hundred percent of the number of shares of common stock into which the notes were convertible into. However, in the event we pay the convertible notes at maturity, then the holder shall receive warrants equal to fifty percent of the number of shares of common stock into which the notes were convertible into. The warrants have a five-year term and a $1.00 per share exercise price. The exercise price and number of shares of our common stock issuable upon exercise of the warrants may be adjusted in certain circumstances, including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. These warrants also provide holders with weighted-average anti-dilution price protection. As of March 15, 2013, all of such convertible notes remain outstanding. Warrants Issued in 2013 On January 11, 2013, we entered into an agreement with certain accredited investors for Series A-1 Preferred Stock, whereby the investors each acquired a Series A Warrant, a Series B Warrant, and a Series C Warrant (which we refer to collectively in this prospectus as the Warrants). The Series A Warrant allows the holders the right to acquire, initially before any adjustments to the conversion price, up to an additional 4,166,666 shares of our common stock at an exercise price of approximately $0.72 per share over a period of five (5) years. The Series A Warrant also allows for such warrant to be exercised on a cashless basis. As of March 15, 2013, Series A Warrants to purchase an aggregate of 4,166,666 shares of our common stock are outstanding and an initial exercise price of $0.72 per share, subject to adjustment. The Series B Warrant allows the holders a one-year period to exercise an overallotment option as contained in the Series B Warrant to purchase, initially before any adjustments to the conversion price, up to an additional aggregate of 2,083,334 shares of our common stock at a price of $0.60 per share. The Series B Warrant may not be exercised on a cashless basis except only in certain limited circumstances. In the event the holders exercise, in whole or in part the overallotment option as contained in the Series B warrant, then the holders shall have the right to exercise on a pro rata basis the portion of the Series C Warrant issued to the holders to acquire, initially before any adjustments to the conversion price, up to an additional aggregate of 2,083,334 shares of our common stock at an exercise price of approximately $0.72 per share over a period of five (5) years. The Series C Warrant allows for such warrant to be exercised on a cashless basis. As of March 15, 2013, Series B Warrants to purchase an aggregate of 2,083,334 shares of our common stock are outstanding with an initial exercise price of $0.60 per share, subject to adjustment, and Series C Warrants to purchase an aggregate of 2,083,334 shares of our common stock are outstanding. The Warrants contain exercise and conversion limitations providing that a holder thereof may not exercise to the extent (but only to the extent) that, if after giving effect to such exercise, the holder or any of its affiliates would beneficially own in excess of 9.99% of the outstanding shares of common stock immediately after giving effect to such exercise. Each of the Warrants contain standard anti-dilution adjustments in the event of a stock dividend, stock split or similar corporate transaction. In addition, if, at any time while any of the Warrants are outstanding, we sell any common stock (or securities issuable into common stock) or grant any option to purchase any common stock at an effective price per share that is lower than the then exercise price of the applicable Warrants, then the exercise price shall be reduced to equal the effective price per share (as determined pursuant to the applicable Warrant) of the diluting issuance. No adjustments will be made for shares of common stock or options granted to employees, officers or directors under our Equity Incentive Plan, upon conversion or exchange of any securities outstanding as of the time of the issuance of the Warrants or in connection with certain business combinations. In the event we (i) declare dividends on our common stock, (ii) grant any right to acquire common stock or other property pro rata to all of our holders of our common stock or (iii) enter into a fundamental transaction that provides for consideration to the holders of our common stock, then the Warrants shall have the right to participate on a pro rata as-converted basis without regard to the 9.99% beneficial ownership limitation. Options October 21, 2010, the Company established the EIP for officers, employees, directors, consultants and advisors to the Company and its affiliates, consisting of 4,250,000 shares of common stock. The EIP authorizes the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, restricted stock and restricted stock units. As of March 15, 2013, 950,000 shares remained available for issuance under the EIP (including 680,000 shares subject to outstanding option awards, with a weighted average exercise price of $0.72. Registration Rights We agreed to a covenant in conjunction with the purchase agreement executed in connection with the sale of the Series A-1 Preferred Stock and Warrants to use our commercially reasonable efforts cause this registration statement to be declared effective by the SEC within sixty (60) calendar days of filing with the SEC (105 days if the SEC reviews such registration statement). If (i) we are late in filing this registration statement, (ii) we fail to file with the SEC a request for acceleration in accordance with Rule 461 of the Securities Act within five trading days of our being notified by the SEC that this registration statement will not be subject to further review by the SEC, (iii) we fail to timely file a pre-effective amendment or otherwise respond in writing to comments made by the SEC in respect of this registration statement, (iv) this registration statement is late in being declared effective by the SEC, or (v) following the effective date of this registration statement, this registration statement ceases to remain continuously effective as to the registrable securities contained herein, then the holders of registrable common stock shall be entitled to monetary damages equal to two percent (2%) of the aggregate purchase price paid by such holder pursuant to the purchase agreement upon the occurrence of one of the foregoing events and for each full month thereafter until the applicable event is cured. On March 8, 2013 each of the purchasers agreed to reduce the number of shares required to be registered under the registration rights agreement to the number of shares initially issuable upon conversion of the Series A-1 Preferred Stock and upon exercise of the Series B Warrant. In the event any shares of common stock are removed from the registration statement in response to a comment from the staff of the SEC limiting the number of shares of common stock which may be included in this registration statement or which may be resold by the holders of registrable common stock in accordance with Rule 144 under the Securities Act, we shall give the holders at least five (5) trading days prior written notice along with the calculations as to such holder s allotment. In the event we amend this registration statement in accordance with the foregoing, we will use our best efforts to file with the SEC, as promptly as allowed by the SEC or to registrants of securities in general, one or more registration statements on Form S-1 or such other form available to register for resale those registrable securities that were not registered for resale on the initial registration statement. We shall keep this registration statement effective and up to date until the earlier of (i) the date on which the securities may be resold by the selling stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for us to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. If, at any time there is not an effective registration statement covering all of the common stock to be registered hereunder, the holders of the Warrants and Series A-1 Preferred Stock shall have "piggyback" registration rights for the shares of common stock underlying such Warrants and Series A-1 Preferred Stock with respect to any registration statement filed by us following the effectiveness of the registration statement described above, which would permit the inclusion of such underlying shares. Lockup Agreements In connection with the issuance of the Series A-1 Preferred Stock on January 11, 2013, all of our directors and officers and one 5% stockholder were required to sign a lock-up agreement which restricts all such persons from selling virtually all of the securities of the Company owned by each such person for the period of time from January 11, 2013 until the date which is two (2) months after the effective date of this registration statement. Under such lock-up agreement, the one 5% stockholder and our officers are permitted to sell up to 50,000 shares each during the entire term of the lock-up period, at a rate of no more than 5,000 shares per trading day per each person. Our officers were not given any inducements to agree to sign such lock-up agreements. The 5% stockholder was granted a 5-year warrant to purchase 25,000 shares of common stock at an exercise price of $0.72 per share as an inducement to sign such lock-up agreement. As a further requirement of the issuance of the Series A-1 Preferred Stock on January 11, 2013, investors in the Company that purchased the December 2011 Convertible Notes, investors in the Company participated in the May 2012 private placement, and investors in the Company that participated in the November 2011 private placement were required to sign a separate lock-up agreement which restrict all such investors from selling certain securities of the Company owned by each such investor for the period of time from January 11, 2013 until the date which is two (2) months after the effective date of this registration statement. As an inducement granted to execute the lock-up agreements, we offered investors that participated in the May 2012 private placement and November 2011 private placement a pro rata portion of an increase of the warrants, in the aggregate, to acquire an additional 194,833 shares of common stock. As an inducement granted to execute lock-up the agreements, we also offered our December 2011 note holders a pro rata portion of an increase of the warrants, upon conversion of such notes, in the aggregate, to acquire an additional 239,890 shares of common stock. Liability and Indemnification of Directors and Officers Nevada Revised Statutes Sections 78.7502 and 78.751 provide us with the power to indemnify any of our directors and officers. The director and officer must have conducted himself or herself in good faith and reasonably believe that his or her conduct was in, or not opposed to, out best interests. In a criminal action, the director, officer, employee, or agent must not have had reasonable cause to believe that his or her conduct was unlawful. Under Nevada Revised Statutes Section 78.751, advances for expenses may be made by agreement if the director or officer affirms in writing that he or she believes that he or she has met the statutory standards and will personally repay the expenses if it is determined that such officer or director did not meet the statutory standards. Our amended and restated articles of incorporation allow for indemnification of directors and officers to the maximum extent permitted by the Nevada Revised Statutes. Insofar as indemnification for liability under the Securities Act may be permitted for our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. Future Stock Issuances Except as expressly set forth herein or pursuant to the EIP, we have no current plans to issue any additional shares of our capital stock. Trading Information Our common stock is quoted on the OTC Bulletin Board under the symbol "XXII.OB." Transfer Agent The transfer agent and registrar for our common stock is Continental Stock Transfer & Trust Company, 17 Battery Place, 8th Floor, New York, NY 10004. We will serve as warrant agent for the outstanding warrants. Legal Matters The validity of the securities offered by this prospectus will be passed upon by Foley & Lardner, LLP. Foley & Lardner, LLP owns 1,000,000 shares of common stock of the Company and holds a promissory note issued by the Company to Foley & Lardner LLP in the principal amount of $175,000 which bears interest at the rate of 5% per annum and has a maturity date of July 1, 2014. Experts Freed Maxick CPAs, P.C. (formerly Freed Maxick & Battaglia CPAs, PC), an independent registered public accounting firm, has audited the financial statements of 22nd Century Group, Inc. as of December 31, 2012 and for each of the years in the two (2)-year period ended December 31, 2012, as stated in their report appearing herein, and have been so included in reliance upon the report of the firm given upon their authority as experts in accounting and auditing. Changes In and Disagreements With Accountants On Accounting and Financial Disclosure On January 27, 2011, our Board approved the dismissal of Child, Van Wagoner & Bradshaw, PLLC ("Child"), as our independent registered public accounting firm and engaged Freed Maxick CPAs, PC ("Freed"), as our independent registered public accounting firm, both effective as of January 27, 2011. Freed was the independent registered public accounting firm of 22nd Century Limited, LLC prior to the Merger and, given that the business of 22nd Century Limited, LLC is now our sole line of business, our Board concluded that Freed should serve as our independent registered public accounting firm. Child s report on our financial statements for each of 22nd Century Group, Inc. s past two fiscal years ended September 30, 2010 and 2009 did not contain an adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles, except that the report was qualified as to 22nd Century Group, Inc. s ability to continue as a going concern. During the fiscal years ended September 30, 2010 and 2009 and the subsequent interim period through January 27, 2011, there were no: (i) disagreements with Child on any matter of accounting principles or practices, financial statement disclosure, or auditing scope of procedure which, if not resolved to the satisfaction of Child, would have caused Child to make reference to the matter in their report, or (ii) reportable events as defined in Item 304(a)(1)(v) of Regulation S-K. During the fiscal years ended September 30, 2010 and 2009 and the subsequent interim period through January 27, 2011, neither 22nd Century Group, Inc. nor anyone acting on its behalf consulted Freed regarding either: (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements; or (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K). Where You Can Find More Information We file annual, quarterly and special reports, proxy statements and other information with the SEC under the Exchange Act (File No. 000-54111). We have also filed with the SEC a registration statement on Form S-1 under the Securities Act to register the shares offered by this prospectus. The term "registration statement" means the original registration statement and any and all amendments thereto, including the schedules and exhibits to the original registration statement or any amendment. This prospectus is part of that registration statement. This prospectus does not contain all of the information set forth in the registration statement or the exhibits to the registration statement. For further information with respect to us and the shares we are offering pursuant to this prospectus, you should refer to the registration statement and its exhibits. Statements contained in this prospectus as to the contents of any contract, agreement or other document referred to are not necessarily complete, and you should refer to the copy of that contract or other documents filed as an exhibit to the registration statement. You may read or obtain a copy of the registration statement at the SEC s public reference facilities and Internet site referred to below. You may read or obtain copies of these reports and other information filed with the SEC by us at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can call the SEC at 1-800-SEC-0330 for information regarding the operations of its Public Reference Room and any copying charges assessed by the SEC. The SEC also maintains a website at http://www.sec.gov that contains registration statements, reports, proxy information statements and other information regarding registrants regarding registrants (including us) that file electronically. The information contained on the SEC s website is not intended to be incorporated by reference in this prospectus and you should not consider that information a part of this prospectus. 22nd GROUP, INC. AND SUBSIDIARY INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm F-1 Consolidated Financial Statements: Consolidated Balance Sheets December 31, 2012 and 2011 F-2 Consolidated Statements of Operations For the Years Ended December 31, 2012 and 2011 F-3 Consolidated Statements of Shareholders Deficit For the Years Ended December 31, 2012 and 2011 F-4 Consolidated Statements of Cash Flows For the Years Ended December 31, 2012 and 2011 F-5 Notes to the December 31, 2012 Consolidated Financial Statements F-6 6,250,000 Shares of Common Stock 22nd CENTURY GROUP, INC. PROSPECTUS _______________________, 2013 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Issuance and Distribution. Set forth below is an estimate (except for registration fees, which are actual) of the approximate amount of the fees and expenses payable by us in connection with the issuance and distribution of the shares of our common stock. AMOUNT EXPENSE Registration Fees $2,680 Legal Fees and Expenses $85,000 Accounting Fees and Expenses $20,000 Miscellaneous Fees and Expenses $3,500 Total $111,180 Item 14. Indemnification of Directors and Officers. Nevada Revised Statutes (NRS) Sections 78.7502 and 78.751 provide us with the power to indemnify any of our directors, officers, employees and agents. The person entitled to indemnification must have conducted himself in good faith, and must reasonably believe that his conduct was in, or not opposed to, our best interests. In a criminal action, the director, officer, employee or agent must not have had reasonable cause to believe that his conduct was unlawful. Under NRS Section 78.751, advances for expenses may be made by agreement if the director or officer affirms in writing that he has met the standards for indemnification and will personally repay the expenses if it is determined that such officer or director did not meet those standards. Our bylaws include an indemnification provision under which we have the power to indemnify, to the extent permitted under Nevada law, our current and former directors and officers, or any person who serves or served at our request for our benefit as a director or officer of another corporation or our representative in a partnership, joint venture, trust or other enterprise, against all expenses, liability and loss reasonably incurred by reason of being or having been a director, officer or representative of ours or any of our subsidiaries. We may make advances for expenses upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he, she or it is not entitled to be indemnified by us. Our articles of incorporation provide a limitation of liability such that no director or officer shall be personally liable to us or any of our stockholders for damages for breach of fiduciary duty as a director or officer, involving any act or omission of any such director or officer, provided there was no intentional misconduct, fraud or a knowing violation of the law, or payment of dividends in violation of NRS Section 78.300. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of ours under Nevada law or otherwise, we have been advised the opinion of the SEC is that such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event a claim for indemnification against such liabilities (other than payment by us for expenses incurred or paid by a director, officer or controlling person of ours in successful defense of any action, suit, or proceeding) is asserted by a director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction, the question of whether such indemnification by it is against public policy in the Securities Act and will be governed by the final adjudication of such issue. II-1 Item 15. Recent Sales of Unregistered Securities. There have been no sales of unregistered securities within the last three years which would be required to be disclosed pursuant to Item 701 of Regulation S-K, except for the following: Sales by the Company Merger On January 25, 2011, we entered into an Agreement and Plan of Merger and Reorganization with Acquisition Sub, and 22nd Century. On that date, in consummation of the Merger contemplated under the Agreement and Plan of Merger and Reorganization, Acquisition Sub merged with and into 22nd Century, and 22nd Century, as the surviving entity, became our wholly-owned subsidiary. Prior to the closing of the Merger, we transferred all of our pre-Merger operating assets and liabilities pursuant to the terms of a split-off agreement, to our wholly-owned subsidiary, Touchstone Split Corp., a Delaware corporation, or the Split-Off Subsidiary. Thereafter, pursuant to the split-off agreement, we transferred all of the outstanding capital stock of the Split-Off Subsidiary to our then-sole director in exchange for $1.00, such consideration being deemed to be adequate by our pre-Merger board of directors. At the closing of the Merger, each membership interest of 22nd Century issued and outstanding immediately prior to the closing of the Merger was exchanged for one (1) share of our common stock, and each warrant to purchase limited liability company membership interests of 22nd Century was exchanged for one warrant of like tenor and term to purchase shares of our common stock. An aggregate of 21,434,446 shares of common stock and warrants to purchase an aggregate of 8,151,980 shares of common stock were issued to the holders of limited liability company membership interests and warrants, respectively, of 22nd Century, in the Merger. Immediately following the closing of the Merger, an aggregate of 26,759,646 shares of common stock were issued and outstanding and an aggregate of 8,651,980 shares of our common stock were reserved for issuance pursuant to the exercise of warrants to purchase shares of common stock. Of the 26,759,646 shares of common stock issued and outstanding after the closing of the Merger, approximately 59.8% of such issued and outstanding shares were held by individuals and entities that were holders of limited liability company membership interests of 22nd Century prior to consummation of the Private Placement Offering, approximately 20.3% were held by the investors in the Private Placement Offering, and approximately 19.9% were held by the pre-Merger stockholders of the Company. The issuance of the securities in the Merger was not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws. December 14, 2011 On December 14, 2011, we entered into a Securities Purchase Agreement with certain accredited investors, whereby the purchasers acquired approximately $1.9 million of convertible promissory notes for an aggregate purchase price of approximately $1.7 million in a private placement. The notes were issued with an original issue discount of approximately 15% and the original maturity date of the notes was December 14, 2012 (which was extended as set forth below). The notes are convertible into shares of our common stock at any time prior to maturity at an initial per share conversion price equal to $0.75, subject to adjustment pursuant to the terms of the notes. Upon conversion of all or a portion of the note into common stock, the holder will receive at that time a warrant to purchase such number of shares of common stock equal to 120% of such number of shares of common stock issuable upon conversion of the note, with the warrants having an exercise price of $1.50 per share. Between December 14, 2012 and January 2, 2013, we entered into agreements with holders of $1,675,000 of the 15% notes. Holders of $1,330,000 of the notes agreed to extend the maturity date of the notes to April 14, 2013. Holders of $100,000 of the notes elected to convert into shares of the common stock pursuant to the terms of the notes. Holders of $215,000 of the notes elected to enter into a forbearance agreement. Holders of $30,000 of the notes agreed to be paid over time. As of January 22, 2013, the holders of the $215,000 Convertible Note and the $30,000 note were paid in full, including all accrued interest. II-2 On January 24, 2013, we sent out notices to the holders of the notes regarding our intent to repay the notes at the expiration of a 15-day period during which time the all of the remaining note holders elected to convert the notes into a total of 1,874,226 shares of common stock and warrants to purchase 2,249,071 shares of common stock. Of those warrants issued upon conversion of such Convertible Notes, warrants to purchase 219,909 shares of common stock were the result of inducements granted to the holders of such Convertible Notes to execute the lock-up agreements described below. The notes and warrants were offered and sold to accredited investors pursuant to an exemption from the registration requirements under Sections 4(2), Section 4(6) and Regulation S of the Securities Act and Rule 506 of Regulation D promulgated thereunder. January 24, 2012 On January 24, 2012, we entered into an agreement with Foley & Lardner LLP to resolve an outstanding debt of approximately $260,000. A portion of the outstanding debt was satisfied by the issuance to Foley & Lardner LLP of 1,000,000 shares of common stock that were valued at the average of the closing prices on the OTC Bulletin Board for a 10-day trading period. The shares were sold pursuant to an exemption from the registration requirements under Sections 4(2) and Section 4(6) of the Securities Act January 25, 2012 We understand issued an aggregate of 25,000 shares of common stock pursuant to an Agreement between the Company and ProActive Capital Resources Group, LLC for investor relations services. The shares were sold pursuant to an exemption from the registration requirements under Sections 4(2) and Section 4(6) of the Securities Act. May 15, 2012 On May 15, 2012, we entered into a Securities Purchase Agreement with certain accredited investors whereby the investors acquired approximately 1,710,833 shares of our common stock and warrants with a 5-year term to purchase up to 1,710,833 shares of our common stock at an initial exercise price of $1.00 per share, subject to adjustment pursuant to the terms of the warrants, for an aggregate purchase price of approximately $1,025,500 in a private placement. The common stock and warrants were offered and sold pursuant to an exemption from the registration requirements under Sections 4(2), Section 4(6) and Regulation S of the Securities Act and Rule 506 of Regulation D promulgated thereunder. June 19, 2012 On June 19, 2012, we issued an aggregate of 62,500 shares of common stock pursuant to an Agreement between the Company and Maxim Group, LLC for placement agent services. On June 19, 2012, we issued an aggregate of 150,000 shares of common stock pursuant to an Agreement between the Company and Chardan Capital Markets, LLC for investor relation services. On June 19, 2012, we issued an aggregate of 30,000 shares of common stock pursuant to an Agreement between the Company and Michael Pisani for investor relation services. Each of the sales were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act. II-3 August 9, 2012 On August 9, 2012, we completed a private placement of $222,600 of convertible notes, which were sold at a 6% discount. We received proceeds of $210,000. The face amount of the notes may be converted into common stock at the rate of $0.60 per share at the option of the note holder. In the event a holder of the convertible notes elects to convert the note into shares of common stock, then the holder shall receive warrants equal to one-hundred percent of the number of shares of common stock into which the notes were convertible into. However, in the event we pay the convertible notes at maturity, then the holder shall receive warrants equal to fifty percent of the number of shares of common stock into which the notes were convertible into. The warrants have a five-year term and an initial exercise price of $1.00 per share, subject to adjustment pursuant to the terms of the warrants. As of January 22, 2013, all of such convertible notes remain outstanding. November 9, 2012 On November 9, 2012, we entered into a Securities Purchase Agreement with certain accredited investors whereby the investors acquired 3,238,000 shares of common stock and warrants with a 5-year term to purchase up to 1,619,000 shares of our common stock at an initial exercise price of $1.00 per share, subject to adjustment pursuant to the terms of the warrants, for an aggregate purchase price of approximately $809,500. The common stock and warrants were offered and sold pursuant to an exemption from the registration requirements under Sections 4 (2), Section 4(6) and Regulation S of the Securities Act and Rule 506 of Regulation D promulgated thereunder. January 11, 2013 On January 11, 2013, we entered into and closed the transactions described in a Securities Purchase Agreement with certain accredited investors identified therein whereby we sold 2,500 shares of newly created Series A-1 10% Convertible Preferred Stock, or the Series A-1 Preferred Stock and Warrants (as defined below) for an aggregate purchase price of $2,500,000. The shares of Series A-1 Preferred Stock are initially convertible into a total of 4,166,666 shares of the Company s common stock at a conversion price of $0.60 per share, subject to future adjustments. The Series A-1 Preferred Stock will pay a 10.0% annual cash dividend, which may be payable in shares of our common stock, and will have a liquidation preference equal to the stated value of the Series A-1 Preferred Stock of $1,000 per share plus any accrued and unpaid dividends thereon. We also issued to the purchasers a Series A Warrant, a Series B Warrant, and a Series C Warrant, collectively referred to as the Warrants. The Series A Warrant allows the purchasers the right to acquire, initially before any adjustments to the conversion price, up to an additional 4,166,666 shares of our common stock at an exercise price of approximately $0.72 per share over a period of five (5) years. The Series A Warrant also allows for such warrant to be exercised on a cashless basis. The Series B Warrant allows the purchasers a one-year period to exercise an overallotment option as contained in the Series B Warrant to purchase, initially before any adjustments to the conversion price, up to an additional aggregate of 2,083,334 shares of our common stock at a price of $0.60 per share. The Series B Warrant may not be exercised on a cashless basis except only in certain limited circumstances. In the event the purchasers exercise, in whole or in part the overallotment option as contained in the Series B warrant, then the purchasers shall have the right to exercise on a pro rata basis the portion of the Series C Warrant issued to the purchasers to acquire, initially before any adjustments to the conversion price, up to an additional aggregate of 2,083,334 shares of our common stock at an exercise price of approximately $0.72 per share over a period of five (5) years. The Series C Warrant allows for such warrant to be exercised on a cashless basis. We paid Chardan Capital Markets LLC a commission equal to (i) ten percent (10%) of the cash received by us and (ii) 416,666 shares of common stock. The shares were offered and sold pursuant to an exemption from the registration requirements under Sections 4(2), Section 4(6) and Regulation S of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder. II-4 Item 16. Exhibits and Financial Statement Schedules. (b) Exhibits In reviewing the agreements included as exhibits to this registration statement, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company, its subsidiaries or other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and: should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. We acknowledge that, notwithstanding the inclusion of the foregoing cautionary statements, we are responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this registration statement not misleading. Additional information about the Company may be found elsewhere in this registration statement and the Company s other public files, which are available without charge through the SEC s website at http://www.sec.gov. Exhibit No. Description 2.1 Agreement and Plan of Merger and Reorganization dated as of January 25, 2011 by and among the Company, 22nd Century, and Acquisition Sub (incorporated herein by reference to Exhibit 2.1 of the Company s Current Report on Form 8-K filed with the Commission on February 1, 2011). 3.1 Amended and Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.2 of the Company s Annual Report on Form 10-K for the year ended September 30, 2010 filed with the Commission on December 3, 2010). 3.1.1 Certificate of Designation of Preferences, Rights and Limitations of Series A-1 10% Convertible Preferred Stock (incorporated herein by reference to Exhibit 3.1 of the Company s Current Report on Form 8-K filed with the Commission on January 17, 2013). 3.2 Bylaws of the Company (incorporated herein by reference to Exhibit 4.2 to the Company s Form S-8 filed with the SEC on March 30, 2011). 4.1 Form of Convertible Promissory Note (incorporated by reference to Exhibit 4.1 of the Company s Current Report on Form 8-K filed with the Commission on December 16, 2011). 4.1.1 Amendment dated November 29, 2012 to the Company s December 2011 Convertible Notes (incorporated herein by reference to Exhibit 10.1 of the Company s Current Report on Form 8-K filed with the Commission on January 2, 2013). II-5 4.2 Form of Warrant dated as of January 25, 2011 issued to LLC members of 22nd Century prior to the consummation of the Private Placement Offering upon consummation of the Merger (incorporated herein by reference to Exhibit 10.4 of the Company s Current Report on Form 8-K filed with the Commission on February 1, 2011). 4.3 Form of Warrant dated as of January 25, 2011 issued to investors in the Private Placement Offering upon consummation of the Merger (Incorporated herein by reference to Exhibit 10.5 of the Company s Current Report on Form 8-K filed with the Commission on February 1, 2011). 4.4 Form of Warrant dated as of January 25, 2011 issued to the Placement Agent and Sub-Agent upon consummation of the Merger (incorporated herein by reference to Exhibit 10.6 of the Company s Current Report on Form 8-K filed with the Commission on February 1, 2011). 4.5 Advisor Warrant dated as of January 25, 2011 issued to the Placement Agent in connection with that certain Advisory Agreement dated as of January 25, 2011 by and between the Company and the Placement Agent (incorporated herein by reference to Exhibit 10.7 of the Company s Current Report on Form 8-K filed with the Commission on February 1, 2011). 4.6 Form of Common Stock Purchase Warrant (incorporated herein by reference to Exhibit 4.2 of the Company s Current Report on Form 8-K filed with the Commission on December 16, 2011). 4.7 Form of Common Stock Purchase Warrant (incorporated herein by reference to Exhibit 4.1 of the Company s Current Report on Form 8-K filed with the Commission on May 18, 2012). 4.8 Form of Common Stock Purchase Warrant (incorporated herein by reference to Exhibit 4.1 of the Company s Current Report on Form 8-K filed with the Commission on November 13, 2012). 4.9 Form of Series A Common Stock Purchase Warrant (incorporated herein by reference to Exhibit 4.1 of the Company s Current Report on Form 8-K filed with the Commission on January 17, 2013). 4.10 Form of Series B Common Stock Purchase Warrant (incorporated herein by reference to Exhibit 4.2 of the Company s Current Report on Form 8-K filed with the Commission on January 17, 2013). 4.11 Form of Series C Common Stock Purchase Warrant (incorporated herein by reference to Exhibit 4.3 of the Company s Current Report on Form 8-K filed with the Commission on January 17, 2013). 5.1 Opinion of Foley & Lardner LLP as to the legality of the securities being registered (previously filed). 10.1 2010 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.3 to the Company s Form S-8 filed with the SEC on March 30, 2011). 10.2 Form of Securities Purchase Agreement dated as of January 25, 2011 by and among 22nd Century, the purchaser(s) identified on the signature pages thereto and Parent, solely for the purposes of Section E and Section G thereof, as amended (incorporated herein by reference to Exhibit 10.2 of the Company s Current Report on Form 8-K filed with the Commission on February 1, 2011). 10.3 Form of Conversion Agreement (incorporated herein by reference to Exhibit 10.3 of the Company s Current Report on Form 8-K filed with the Commission on February 1, 2011). 10.4 Advisory Agreement dated as of January 25, 2011 by and between the Company and the Placement Agent (incorporated herein by reference to Exhibit 10.8 of the Company s Current Report on Form 8-K filed with the Commission on February 1, 2011). II-6 10.5 Placement Agency Agreement dated as of December 1, 2010 by and between 22nd Century and the Placement Agent (incorporated herein by reference to Exhibit 10.9 of the Company s Current Report on Form 8-K filed with the Commission on February 1, 2011). 10.6 Escrow Agreement dated as of December 2, 2010 by and among 22nd Century, the Placement Agent and Bank of America, National Association (incorporated herein by reference to Exhibit 10.10 of the Company s Current Report on Form 8-K filed with the Commission on February 1, 2011). 10.7 Split-Off Agreement dated as of January 25, 2011 by and among the Company, Touchstone Split. Corp and David Rector (incorporated herein by reference to Exhibit 10.11 of the Company s Current Report on Form 8-K filed with the Commission on February 1, 2011). 10.8 Letter from Paramount Strategy Corp dated as of December 21, 2010 regarding loan forgiveness (incorporated herein by reference to Exhibit 10.12 of the Company s Current Report on Form 8-K filed with the Commission on February 1, 2011). 10.9 Letter from Milestone Enhanced Fund Ltd. dated as of December 28, 2010 regarding loan forgiveness (incorporated herein by reference to Exhibit 10.13 of the Company s Current Report on Form 8-K filed with the Commission on February 1, 2011). 10.10 Letter from Mark Tompkins dated as of January 25, 2011 regarding loan forgiveness (incorporated herein by reference to Exhibit 10.14 of the Company s Current Report on Form 8-K filed with the Commission on February 1, 2011). 10.11 Employment Agreement dated as of January 25, 2011 by and between the Company and Joseph Pandolfino (incorporated herein by reference to Exhibit 10.15 of the Company s Current Report on Form 8-K filed with the Commission on February 1, 2011). 10.12 Employment Agreement dated as of January 25, 2011 by and between the Company and Henry Sicignano III (incorporated herein by reference to Exhibit 10.16 of the Company s Current Report on Form 8-K filed with the Commission on February 1, 2011). 10.13 Employment Agreement dated as of March 15, 2011 by and between the Company and Michael R. Moynihan (incorporated by reference to Exhibit 10.18 to the Company s Form S-1 registration statement filed with the Commission on June 6, 2011). 10.14 Restated Promissory Note dated June 30, 2011, payable by the Company to Henry Sicignano III in the principal amount of $150,000 (incorporated by reference to Exhibit 10.20 to the Company s Form S-1 registration statement filed with the Commission on July 20, 2011). 10.15 License Agreement dated March 6, 2009 between North Carolina State University and 22nd Century Limited, LLC (incorporated by reference to Exhibit 10.21 to the Company s Form S-1 registration statement filed with the Commission on August 26, 2011). 10.15.1 Amendment dated August 9, 2012 to License Agreement dated March 6, 2009 between North Carolina State University and 22nd Century Limited, LLC (incorporated by reference to Exhibit 10.1 to the Company s Current Report on Form 8-K filed with the Commission on August 20, 2012). 10.16 License Agreement dated May 1, 2009 between The National Research Council of Canada and 22nd Century Limited, LLC (incorporated by reference to Exhibit 10.22 to the Company s Form S-1 registration statement filed with the Commission on August 26, 2011). 10.17 Letter Agreement between the Company and NCSU dated November 22, 2011 (incorporated by reference to Exhibit 10.1 to the Company s Form 8-K filed with the Commission on November 23, 2011). II-7 10.18 Form of Securities Purchase Agreement, dated as of December 14, 2011, by and between 22nd Century Group, Inc. and the purchasers thereto (incorporated by reference to Exhibit 10.1 to the Company s Form 8-K filed with the Commission on December 16, 2011). 10.19 Form of Securities Purchase Agreement, dated as of January 11, 2013, by and between 22nd Century Group, Inc. and the purchasers thereto (incorporated herein by reference to Exhibit 10.1 of the Company s Current Report on Form 8-K filed with the Commission on January 17, 2013). 10.20 Form of Registration Rights Agreement, dated as of January 11, 2013, by and between 22nd Century Group, Inc. and the parties thereto (incorporated herein by reference to Exhibit 10.2 of the Company s Current Report on Form 8-K filed with the Commission on January 17, 2013). 10.21 Form of Insiders Lock-Up Agreement (incorporated herein by reference to Exhibit 10.3 of the Company s Current Report on Form 8-K filed with the Commission on January 17, 2013). 10.22 Form of Specified Investors Lock-Up Agreement (incorporated herein by reference to Exhibit 10.4 of the Company s Current Report on Form 8-K filed with the Commission on January 17, 2013). 10.23 NCSU Promissory Note (incorporated herein by reference to Exhibit 10.23 of the Company s Form 10-K filed with the Commission on March 18, 2013). 10.24 Promissory Note dated March 13, 2013 between the Company and Foley & Lardner LLP (incorporated herein by reference to Exhibit 10.24 of the Company s Form 10-K filed with the Commission on March 18, 2013). 10.25 Employment Agreement between Mr. Brodfuehrer and the Company dated March 19, 2013 (incorporated herein by reference to Exhibit 10.1 of the Company s Current Report on Form 8-K filed with the Commission on March 25, 2013). 21.1 Subsidiaries of the Company (previously filed) 23.1 Consent of Foley & Lardner LLP (included in Exhibit 5.1 as previously filed). 23.2* Consent of Freed Maxick CPAs, P.C. 101 Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements. 101.INS XBRL Instance Document (previously filed) 101.SCH XBRL Taxonomy Extension Schema Document (previously filed) 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document (previously filed) 101.DEF XBRL Taxonomy Extension Definition Linkbase Document (previously filed) 101.LAB XBRL Taxonomy Extension Label Linkbase Document (previously filed) 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document (previously filed) *Filed herewith. Management contract or compensatory plan, contract or arrangement. Certain portions of the exhibit have been omitted pursuant to a confidential treatment order. An unredacted copy of the exhibit has been filed separately with the United States Securities and Exchange Commission pursuant to the request for confidential treatment. II-8 Item 17. Undertakings. The undersigned registrant hereby undertakes: (A) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post effective amendment any of the securities being registered which remain unsold
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+This summary highlights information included elsewhere in this prospectus and does not contain all of the information you should consider in making an investment decision. You should read this entire prospectus carefully, including the sections entitled Risk factors, Cautionary statement concerning forward-looking statements, Selected historical combined financial data, Unaudited pro forma condensed combined financial statements and Management s discussion and analysis of financial condition and results of operations and our combined financial statements and the notes thereto before making an investment decision regarding our Class A common stock. Our company Zoetis is a global leader in the discovery, development, manufacture and commercialization of animal health medicines and vaccines, with a focus on both livestock and companion animals. For more than 60 years, as a business unit of Pfizer, we have been committed to enhancing the health of animals and bringing solutions to our customers who raise and care for them. Measured by our revenues of $4.2 billion for the year ended December 31, 2011, we are the largest animal health medicines and vaccines business, with our products sold in more than 120 countries and across eight core species and five major product categories. With our sales organization of approximately 3,400 employees, we directly market our portfolio of more than 300 product lines to livestock producers and veterinarians located in approximately 70 countries across North America, Europe, Africa, Asia, Australia and Latin America, and are a market leader in nearly all of the major regions in which we operate. Through our efforts to establish an early and direct presence in many emerging markets, such as Brazil, China and India, emerging markets contributed 27% of our revenues for the year ended December 31, 2011, which we believe makes us the largest animal health medicines and vaccines business as measured by revenues across emerging markets as a whole. In markets where we do not have a direct commercial presence, we generally contract with distributors that provide logistics and sales and marketing support for our products. We believe our investments in the industry s largest sales organization, which includes an extensive network of technical and veterinary operations specialists, our high-quality manufacturing and reliability of supply, and our long track record of developing products that meet customer needs, lead to enduring and valued relationships with our customers. From 2004 to 2011, we obtained approximately one-fourth of all animal health medicine approvals granted by the U.S. Food and Drug Administration, or FDA, and approximately one-fifth of all animal health vaccine approvals granted by the U.S. Department of Agriculture, or USDA. The majority of our research and development, or R&D, programs focus on brand lifecycle development, which is defined as R&D programs that leverage existing animal health products by adding new species or claims, achieving approvals in new markets or creating new combinations and reformulations. We believe our ability to successfully position our diverse portfolio of products with high brand recognition in attractive markets and execute our operating plan has contributed to our financial performance over the last several years. For the nine months ended September 30, 2012, our revenues were $3.2 billion, reflecting growth of 2% compared to the nine months ended October 2, 2011. For the years ended December 31, 2011 and 2010, our revenues were $4.2 billion and $3.6 billion, reflecting growth of 18% and 30% compared to the prior year periods. As a result of the impact of recent significant acquisitions and related government-mandated divestitures on the revenue numbers in our statement of operations, during the nine months ended September 30, 2012 and October 2, 2011 and the years ended December 31, 2011, 2010 and 2009, the growth trend on our existing portfolio from year to year is not readily apparent. We believe that it is not only important to understand overall revenue growth, but also existing portfolio growth year over year. As such, we utilize base revenue growth. Base revenue growth is defined as revenue growth excluding the impact of incremental revenues from recent Table of Contents The information in this preliminary prospectus is not complete and may be changed. The debt-for-equity exchange parties may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to completion, dated January 28, 2013 Prospectus 86,100,000 Shares Zoetis Inc. Class A common stock This is the initial public offering of Class A common stock of Zoetis Inc. All of our shares of common stock are currently held by Pfizer Inc. In connection with this offering, Pfizer will exchange shares of our Class A common stock for indebtedness of Pfizer held by certain of the underwriters, which we refer to, in such role, as the debt-for-equity exchange parties. The debt-for-equity exchange parties will then sell these shares pursuant to this offering. As a result, the debt-for-equity exchange parties, and not Pfizer or Zoetis, will receive the net proceeds from the sale of the shares in this offering. Prior to this offering, there has been no public market for our Class A common stock. Our Class A common stock has been approved for listing on the New York Stock Exchange, or NYSE, under the symbol ZTS. The estimated initial public offering price is between $22.00 and $25.00 per share of Class A common stock. In connection with this offering, we will have two classes of authorized common stock: Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock will be identical, except with respect to voting and conversion rights. The holders of Class A common stock and Class B common stock will each be entitled to one vote per share for all matters submitted to a vote of stockholders other than with respect to the election of directors. With respect to the election of directors, the holders of Class B common stock will be entitled to ten votes per share, and the holders of Class A common stock will be entitled to one vote per share. Each share of Class B common stock held by Pfizer or one of its subsidiaries will be convertible into one share of Class A common stock at any time but will not be convertible if held by any other holder.
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