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+Prospectus summary This summary highlights information contained elsewhere in this prospectus. This summary sets forth the material terms of this offering but does not contain all of the information that you should consider before deciding to invest in our Common Stock. You should read the entire prospectus carefully before making an investment decision, especially the risks of investing in our Common Stock discussed in the section titled Risk factors and our financial statements and related notes appearing elsewhere in this prospectus. Unless the context otherwise requires, the terms Company, ALC, we, our and us refer to Air Lease Corporation and its subsidiaries. Our company Air Lease Corporation is an aircraft leasing company that was launched in February 2010 by aviation industry pioneer Steven F. Udvar-H zy. We are principally engaged in purchasing commercial aircraft which we, in turn, lease to airlines around the world to generate attractive returns on equity. We lease our aircraft to airlines pursuant to net operating leases that require the lessee to pay for maintenance, insurance, taxes and all other aircraft operating expenses during the lease term. As of June 30, 2011, we owned 65 aircraft of which 13 were new aircraft and 52 were used aircraft. Our fleet is comprised of fuel-efficient and newer technology aircraft, consisting of narrowbody (single-aisle) aircraft, such as the Airbus A319/320/321 and the Boeing 737-700/800, and select widebody (twin-aisle) aircraft, such as the Airbus A330-200 and the Boeing 777-300ER. We manage lease revenues and take advantage of changes in market conditions by acquiring a balanced mix of aircraft types, both new and used. Our used aircraft are generally less than five years old. All of the aircraft we own were leased as of June 30, 2011. Additionally, as of June 30, 2011, we had entered into binding and non-binding purchase commitments to acquire an additional 234 new aircraft through 2020 and nine used aircraft in 2011. Through careful management and diversification of our leases and lessees by geography, lease term, and aircraft age and type, we mitigate the risks of owning and leasing aircraft. We believe that diversification of our leases and lessees reduces the risks associated with individual lessee defaults and adverse geopolitical and regional economic events. We manage lease expirations in our fleet portfolio over varying time periods in order to minimize periods of concentrated lease expirations and mitigate the risks associated with cyclical variations in the airline industry. We target to place new aircraft under leases with a minimum term of six years for narrowbody aircraft and nine years for widebody aircraft. As of June 30, 2011, the weighted average lease term remaining on our current leases was 6.1 years, and we leased the aircraft in our portfolio to 43 airlines in 26 countries. We operate our business on a global basis, providing aircraft to airline customers in every major geographical region, including emerging and high-growth markets such as Asia, the Pacific Rim, Latin America, the Middle East and Eastern Europe. According to AVITAS, many of these emerging markets are experiencing increased demand for passenger airline travel and have lower market saturation than more mature markets such as North America and Western Europe. In addition, airlines in some of these emerging markets have fewer financing alternatives, enabling us to command relatively higher lease rates compared to more mature markets. With our well-established industry contacts and access to capital, we believe we will be able to continue successfully implementing our business strategy worldwide. As of June 30, 2011, we 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 Company is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, dated September 2, 2011. Prospectus 59,981,528 shares of Class A Common Stock 1,829,339 shares of Class B Non-Voting Common Stock This prospectus relates to the following shares of Class A Common Stock and Class B Non-Voting Common Stock of Air Lease Corporation (together, the Common Stock ), all of which may be offered for sale by the selling stockholders named in this prospectus: (i) 59,981,528 shares of Class A Common Stock, including up to 482,625 shares of Class A Common Stock issuable upon exercise of outstanding warrants, and (ii) 1,829,339 shares of Class B Non-Voting Common Stock. The selling stockholders acquired the shares of Common Stock offered by this prospectus in a private placement. We are registering the offer and sale of the shares of Common Stock to satisfy registration rights we granted to the selling stockholders. We are not selling any shares of Common Stock under this prospectus and we will not receive any proceeds from the sale of Common Stock by the selling stockholders. The shares of Common Stock to which this prospectus relates may be offered and sold from time to time directly by the selling stockholders or alternatively through underwriters or broker-dealers or agents on terms to be determined at the time of sale. The shares of Common Stock may be sold in one or more transactions, at fixed prices, at prevailing market prices at the time of sale or at negotiated prices. Because all of the shares being offered under this prospectus are being offered by selling stockholders, we cannot determine the price or prices at which the shares of Common Stock may be sold under this prospectus. To the extent required, the names of any agent or broker-dealer and the applicable commissions or discounts and any other required information with respect to any particular offer will be set forth in a prospectus supplement that will accompany this prospectus. A prospectus supplement also may add, update or change information contained in this prospectus. We recently completed our initial public offering of 34,825,470 shares of our Class A Common Stock. Our Class A Common Stock is listed on the New York Stock Exchange, or the NYSE, under the symbol AL. On September 1, 2011, the last reported sale price of our Class A Common Stock on the NYSE was $22.37 per share. Our Class B Non-Voting Common Stock is not currently listed on any national securities exchange or market system. Investing in our Common Stock involves a high degree of risk. See Risk factors beginning on page 14. 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 , 2011. have entered into leases and future lease commitments with airlines in Australia, Brazil, Bulgaria, Canada, China, Columbia, the Czech Republic, Ethiopia, France, Germany, India, Indonesia, Ireland, Italy, Japan, Kazakhstan, Kenya, Malaysia, Mexico, Mongolia, the Netherlands, New Zealand, Norway, the Republic of Seychelles, Russia, South Africa, South Korea, Spain, Sri Lanka, Thailand, Trinidad Tobago, Turkey, United Arab Emirates, the United Kingdom, the United States and Vietnam. While our primary business is to own and lease aircraft, we also plan to provide fleet management and remarketing services to third parties for a fee. These services are similar to those we perform with respect to our fleet, including leasing, re-leasing, lease management and sales services. Air Lease Corporation is led by a highly experienced management team that includes Mr. Udvar-H zy, our Chairman and Chief Executive Officer, John L. Plueger, our President and Chief Operating Officer, Grant A. Levy, our Executive Vice President, General Counsel and Secretary, Marc H. Baer, our Executive Vice President, Marketing, Alex A. Khatibi, our Executive Vice President, Jie Chen, our Executive Vice President and Managing Director of Asia, James C. Clarke, our Senior Vice President and Chief Financial Officer, Gregory B. Willis, our Vice President, Finance, and Chief Accounting Officer, and John D. Poerschke, our Senior Vice President of Aircraft Procurement and Specifications. On average, our senior management team has over 23 years of experience in the aviation industry. Operations to date Current fleet As of June 30, 2011, our aircraft fleet consisted of 55 narrowbody aircraft and ten widebody aircraft, and the weighted average age of our aircraft fleet was 3.6 years. Aircraft purchase commitments As of June 30, 2011, we had commitments to acquire a total of 234 new aircraft and nine used aircraft at an estimated aggregate purchase price (including adjustment for anticipated inflation) of approximately $11.9 billion for delivery as shown below. Aircraft Type 2011 (1) 2012 2013 2014 2015 Thereafter Total Airbus A319-100 1 1 Airbus A320/321-200 5 10 13 12 7 47 Airbus A320/321 NEO(2)(3) 50 50 Airbus A330-200/300 6 6 12 Boeing 737-700 2 2 Boeing 737-800(2) 2 3 12 12 14 37 80 Boeing 767-300ER 2 2 Boeing 777-300ER(3) 2 3 5 Boeing 787-9(3) 4 4 Embraer E175/190 11 19 30 ATR 72-600 2 8 10 Total 31 46 25 26 24 91 243 (1) Of the 31 aircraft that we will acquire in the remainder of 2011, the following nine aircraft will be used aircraft: the Airbus A319-100, one Airbus A320-200, one Airbus A330-200, both Boeing 737-700s, both Boeing 737-800s and both Boeing 767-300ERs. (2) We have cancellation rights with respect to 14 of the Airbus A320/321 NEO aircraft and four of the Boeing 737-800 aircraft. (3) As of June 30, 2011, all of the Airbus A320/321 NEO aircraft, the Boeing 777-300ER aircraft and the Boeing 787-9 aircraft were subject to non-binding memoranda of understanding for the purchase of these aircraft. Our new aircraft are being purchased pursuant to binding purchase agreements with each of Airbus S.A.S. ( Airbus ), The Boeing Company ( Boeing ), Embraer S.A. ( Embraer ) and Avions de Transport R gional ( ATR ), or through sale-leaseback transactions with other airline customers, other than, as of June 30, 2011, the Airbus A320/A321 NEO aircraft, the Boeing 777-300ER aircraft and the Boeing 789-9 aircraft, the purchase of which were subject to non-binding memoranda of understanding. Under certain circumstances, we have the right to alter the mix of aircraft types that Table of contents Page Industry and market data i Prospectus summary 1

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+This summary highlights information contained elsewhere in this prospectus. This summary may not contain all the information that may be important to you, and we urge you to read this entire prospectus carefully, including the Risk Factors, Business and Management s Discussion and Analysis of Financial Condition and Results of Operations sections and our consolidated financial statements and notes to those statements, included elsewhere in this prospectus, before deciding to invest in our class A shares. Our Business Overview We are the world s largest McDonald s franchisee in terms of systemwide sales and number of restaurants, according to McDonald s, representing 5.1% of McDonald s global sales in 2010, and we are the largest fast food chain in Latin America and the Caribbean in terms of systemwide sales, according to Euromonitor, with a regional market share in terms of sales of 10.4% in 2010, according to Euromonitor. We have the exclusive right to own, operate and grant franchises of McDonald s restaurants in 20 countries and territories in Latin America and the Caribbean, including Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Cura ao, Ecuador, French Guiana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, Trinidad and Tobago (since June 3, 2011), Uruguay, the U.S. Virgin Islands of St. Croix and St. Thomas, and Venezuela, which we refer to as the Territories. As of June 30, 2011, we operated or franchised 1,767 McDonald s-branded restaurants, which represented 6.6% of McDonald s total franchised restaurants worldwide. In the six months ended June 30, 2011 and 2010, we paid $80.0 million and $64.0 million, respectively, in royalties to McDonald s (not including royalties paid on behalf of our franchisees). In 2010 and 2009, we paid $141.0 million and $121.9 million, respectively, in royalties to McDonald s (not including royalties paid on behalf of our franchisees). We commenced operations on August 3, 2007, as a result of our purchase of McDonald s operations and real estate in the Territories (except for Trinidad and Tobago), which we refer to collectively as the McDonald s LatAm business, and the acquisition of McDonald s franchise rights pursuant to the MFAs, as described below, which, together with the purchase of the McDonald s LatAm business, we refer to as the Acquisition. We operate McDonald s-branded restaurants under two different operating formats, those directly operated by us, or Company-operated restaurants, and those operated by franchisees, or franchised restaurants. As of June 30, 2011, of our 1,767 McDonald s-branded restaurants in the Territories, 1,302 (or 73.7%) were Company-operated restaurants and 465 (or 26.3%) were franchised restaurants. We generate revenues primarily from two sources: sales by Company-operated restaurants and revenues from franchised restaurants that primarily consist of rental income, which is generally based on the greater of a flat fee or a percentage of sales reported by franchised restaurants. We own the land for 510 of our restaurants (totaling approximately 1.2 million square meters) and the buildings for all but 12 of our restaurants. Our business has grown significantly since the Acquisition: we have increased our presence in existing and new markets in the Territories by opening 253 restaurants (185 Company-operated and 68 franchised), 137 McCaf locations, where we sell a variety of customizable beverages, and 478 Dessert Centers, where we sell desserts, since the Acquisition. The McDonald s brand s market share of the fast food industry in Latin America and the Caribbean in terms of sales has increased from 10.1% in 2007 to 10.4% in 2010 according to Euromonitor. We have increased our total revenues by 15.8% from 2008 to 2010. More recently, our consolidated total revenues, net income and Adjusted EBITDA (as defined under Presentation of Financial and Other Information Other Financial Measures ) increased 25.9%, 39.1% and 21.6%, respectively, in the six months ended June 30, 2011 as compared to the six months ended June 30, 2010, to $1,715.1 million, $49.7 million and $140.2 million, respectively. In addition, our consolidated total revenues, net income and Adjusted EBITDA increased 13.2%, 32.5% and 12.3%, respectively, in 2010 as compared to 2009, to $3,018.1 million, $106.0 million and $299.1 million, respectively. 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 Preliminary Prospectus dated October 17, 2011 PROSPECTUS 40,432,690 Class A Shares Arcos Dorados Holdings Inc. (incorporated in the British Virgin Islands) The selling shareholders named in this prospectus are offering a total of 40,432,690 class A shares, no par value, of Arcos Dorados Holdings Inc. The selling shareholders will receive all of the net proceeds from this offering. The underwriters may also purchase up to 4,043,268 class A shares from the selling shareholders within 30 days to cover over-allotments, if any. The selling shareholders will receive the net proceeds from any class A shares sold pursuant to the underwriters over-allotment option. Our class A shares are listed on the New York Stock Exchange under the symbol ARCO. On October 14, 2011, the last sale price of our class A shares as reported by the New York Stock Exchange was $25.74 per class A share. Neither the U.S. 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. Investing in our class A shares involves risks. See Risk Factors beginning on page 18 of this prospectus. Per Share Total Public offering price $ $ Underwriting discounts and commissions $ $ Proceeds, before expenses, to selling shareholders $ $ Our class A shares will be ready for delivery on or about , 2011. J.P. Morgan Morgan Stanley Citigroup BofA Merrill Lynch Itau BBA Credit Suisse The date of this prospectus is , 2011. Table of Contents We have not authorized anyone to provide any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we may have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the underwriters have not authorized any other person to provide you with different or additional information. Neither we nor the underwriters are making an offer to sell the class A shares in any jurisdiction where the offer or sale is not permitted. This offering is being made in the United States and elsewhere solely on the basis of the information contained in this prospectus. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of the class A shares. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus. Table of Contents We divide our operations into four geographical divisions: Brazil; the Caribbean division, consisting of Aruba, Cura ao, French Guiana, Guadeloupe, Martinique, Puerto Rico, Trinidad and Tobago and the U.S. Virgin Islands of St. Croix and St. Thomas; the North Latin America division, or NOLAD, consisting of Costa Rica, Mexico and Panama; and the South Latin America division, or SLAD, consisting of Argentina, Chile, Colombia, Ecuador, Peru, Uruguay and Venezuela. As of June 30, 2011, 35.4% of our restaurants were located in Brazil, 29.7% in SLAD, 26.8% in NOLAD and 8.1% in the Caribbean division. We focus on our customers by managing operations at the local level, including marketing campaigns and special offers, menu management and monitoring customer satisfaction, while leveraging our size by conducting administrative and strategic functions at the divisional or corporate level, as appropriate. The following table presents certain operating results and data by operating segment: As of and for the Six Months Ended June 30, As of and for the Years Ended December 31, 2011 2010 2010 2009 2008 2007(1) (in thousands of U.S. dollars, except percentages) (unaudited) Total Revenues Brazil $ 892,063 $ 718,520 $ 1,595,571 $ 1,200,742 $ 1,237,208 $ 461,868 Caribbean division 132,056 127,385 260,617 244,774 231,734 90,796 NOLAD 171,743 141,464 305,017 240,333 232,083 91,932 SLAD(2) 519,284 374,442 856,913 979,627 905,817 296,743 Total 1,715,146 1,361,811 3,018,118 2,665,476 2,606,842 941,339 Adjusted EBITDA(3) Brazil $ 128,566 $ 99,241 $ 250,606 $ 160,037 $ 144,965 $ 39,800 Caribbean division 6,282 9,531 23,556 21,167 22,013 13,099 NOLAD 7,868 4,202 15,400 3,918 15,961 10,655 SLAD(2) 42,933 32,742 83,998 129,889 138,683 36,530 Corporate and others (45,455 ) (30,379 ) (74,446 ) (48,628 ) (33,648 ) (9,187 ) Total 140,194 115,337 299,114 266,383 287,974 90,897 Adjusted EBITDA Margin(4) Brazil 14.4 % 13.8 % 15.7 % 13.3 % 11.7 % 8.6 % Caribbean division 4.8 7.5 9.0 8.6 9.5 14.4 NOLAD 4.6 3.0 5.0 1.6 6.9 11.6 SLAD(2) 8.3 8.7 9.8 13.3 15.3 12.3 Total 8.2 8.5 9.9 10.0 11.0 9.7 Systemwide comparable sales growth(5)(6) 13.7 % 14.9 % 5.5 % Brazil 9.7 17.5 2.7 Caribbean division 0.9 4.7 4.2 NOLAD 8.5 9.1 (1.7 ) SLAD 29.5 16.1 12.2 Table of Contents This is an offering by certain selling shareholders of Arcos Dorados Holdings Inc. and not by McDonald s Corporation or any of its affiliates. Table of Contents (1) Data for the year ended December 31, 2007 includes only five months of operations, beginning August 3, 2007, the date on which we commenced operations in the Territories. (2) Currency controls in Venezuela and related accounting changes have a significant effect on our results of operations and impact the comparability of our results of operations in 2010 compared to 2009. See Management s Discussion and Analysis of Financial Condition and Results of Operations Factors Affecting Comparability of Results Impact of Venezuelan Currency Controls and Related Accounting Changes on Our Results of Operations for information regarding the translation of the results of our Venezuelan operations. (3) Adjusted EBITDA is a measure of our performance that is reviewed by our management. Adjusted EBITDA does not have a standardized meaning and, accordingly, our definition of Adjusted EBITDA may not be comparable to Adjusted EBITDA as used by other companies. For our definition of Adjusted EBITDA and a reconciliation thereof, see Presentation of Financial and Other Information Other Financial Measures and Selected Financial and Other Information. (4) Adjusted EBITDA margin is Adjusted EBITDA divided by total revenues, expressed as a percentage. (5) Systemwide comparable sales growth refers to the change in our restaurant sales in one period from a comparable period for restaurants that have been open for thirteen months or longer. Systemwide comparable sales growth is provided and analyzed on a constant currency basis, which means it is calculated using the same exchange rate over the periods under comparison to remove the effects of currency fluctuations from this trend analysis. We believe this constant currency measure provides a more meaningful analysis of our business by identifying the underlying business trend, without distortion from the effect of foreign currency movements. (6) Systemwide comparable sales growth is presented on a systemwide basis, which means it includes sales by our Company-operated restaurants and our franchised restaurants. While sales by our franchisees are not recorded as revenues by us, we believe the information is important in understanding our financial performance because these sales are the basis on which we calculate and record franchised revenues and are indicative of the financial health of our franchisee base. Our Industry We operate in the quick-service restaurant, or QSR, sub-segment of the fast food segment of the Latin American and Caribbean food service industry. In Latin America and the Caribbean, the fast food segment has benefited from the region s increasing modernization, as people in more densely populated areas adopt lifestyles that increasingly seek convenience, speed and value. According to Euromonitor, fast food segment sales in Latin America and the Caribbean are expected to total an estimated $43.2 billion (nominal value) in 2011. Euromonitor estimates that the fast food segment in Latin America and the Caribbean grew 69.1% in the period from 2005 to 2010, which is 18 percentage points higher than the growth of the Latin American and Caribbean food service industry as a whole, representing a compound annual growth rate of 11.1%, which in turn is significantly higher than the 2.4% compound annual growth rate of the U.S. fast food segment. Euromonitor estimates that QSRs have captured 59.8% of market share within the fast food segment in Latin America and the Caribbean due to the popularity of standardized menus, the consistency of products and services, cost efficient operating systems, the development of products targeted to meet consumer demands, economies of scale, convenience, speed and value. Euromonitor estimates that the growth of QSRs in Latin America and the Table of Contents Caribbean will outpace the growth of the fast food segment generally in the near future, as QSRs tend to be better capitalized and are therefore able to expand through additional restaurant openings and innovation, and as consumers increasingly prefer the convenience and reliability associated with a well-established brand. Euromonitor estimates that the QSR sub-segment in Latin America and the Caribbean grew 63.4% during the period from 2005 to 2010. McDonald s, Burger King, Subway and KFC have positioned themselves as market leaders within the QSR segment. According to Euromonitor, the McDonald s brand is the largest in Latin America and the Caribbean with more than three times the sales of Burger King, our closest competitor, in Latin America and the Caribbean and with more sales than our next five competitors combined. In addition to these international brands, strong local brands, such as Habib s, Bob s, Servicompras and Giraffa s, exist in certain key markets. The chart below indicates the percentage market share held by certain major brands in the fast food segment in Latin America and the Caribbean for 2010: Source: Euromonitor Our Strengths We believe the following are our competitive strengths: Superior Brand and Image. The McDonald s brand is one of the top ten most widely recognized consumer brands in the world, according to Millward Brown Optimor, and it is one of the most widely recognized consumer brands in Latin America and the Caribbean, according to Euromonitor. In addition, we believe that in Latin America and the Caribbean the McDonald s brand benefits from an aspirational cachet as a destination restaurant with a reputation for safe, fresh and good-tasting food in an attractive setting. With the exclusive right to own, operate and grant franchises of McDonald s restaurants in 20 countries and territories in Latin America and the Caribbean, we believe we represent an important part of the McDonald s system. As of June 30, 2011, our 1,767 restaurants represented 6.6% of McDonald s total franchised restaurants. Leading Position in a Region with Favorable Demographics and Economic Conditions. We are the leading fast food chain in Latin America and the Caribbean, according to Euromonitor, with a 10.4% market share, Table of Contents which was more than three times that of our closest competitor, based on systemwide sales in 2010. As a business focused on young adults in the 14 to 35 age range and families with children, our operations have benefited, and we expect to continue to benefit, from our Territories population size, younger age profile when compared to more developed markets and improving socio- economic conditions. Based on data from the United Nations Economic Commission for Latin America and the Caribbean, the Territories represented a market of approximately 575.9 million people in 2010, of which approximately 28% are under 14 years old and 46% are under 25 years old. In addition, improvements in macroeconomic conditions in the Territories are leading to a modernization of consumption patterns and increased affordability of our products across socio-economic segments, and we believe we are well placed to capitalize on these trends. For example, according to the Brazilian Ministry of Finance, 29 million Brazilians joined the middle class between 2003 and 2009 and the percentage of the Brazilian population living in poverty decreased by 45.6% during the same period. Moreover, according to Euromonitor, the percentage of households in Brazil with annual disposable incomes of $5,000 or more was greater than that in China and India in 2010. Pan-regional Market Leader with Geographical Diversification. As the largest QSR chain in Latin America and the Caribbean, according to Euromonitor, our operations include some of the region s largest markets such as Brazil, Mexico, Argentina, Puerto Rico and Colombia. We believe our diversified market presence reduces our dependence on any one market and helps stabilize the impact of individual countries economic cycles on our revenues. Our leading market position and in-depth market knowledge across the Territories also allow us to capitalize on demand for new quick service restaurants in an efficient manner. Furthermore, our long-standing presence in the region has allowed us to build a significant property portfolio with hard-to-replicate locations in key markets across the region that enhance our customers experience and ultimately support our brand and market position. Operational Excellence Translated into Solid Financial Performance. We employ many of the operating procedures used by McDonald s prior to the Acquisition. We support our McDonald s-based training programs with an extensive set of quality controls throughout production, processing and distribution and also in our restaurants, where we monitor restaurant managers performance and use ongoing external customer satisfaction opportunity reports that analyze key operating indicators. In addition, we develop long-term relationships with reliable suppliers who comply with McDonald s rigorous quality standards. These procedures allow us to consistently provide our customers with a high-quality experience in both Company-operated and franchised restaurants across the Territories, thereby allowing us to increase the average check on a constant currency basis as well as the number of transactions per restaurant since the Acquisition. Experienced Management Team and Lead Shareholder. Our senior management team is led by Mr. Woods Staton, our Chairman, Chief Executive Officer, or CEO, and controlling shareholder. Prior to the Acquisition, Mr. Staton was the joint venture partner of McDonald s Corporation in Argentina for over 20 years and was president of McDonald s South Latin America division from 2004 until the Acquisition. Mr. Staton will not be selling any shares in this offering. Our senior management team is comprised of committed, experienced restaurant industry executives, almost all of whom have worked for McDonald s and/or with Mr. Staton in non-McDonald s businesses for over 10 years. Moreover, none of our divisional presidents, vice presidents, chief financial officer, chief operating officer or CEO have left the Company since the Acquisition. The experience of our management team has been a critical component in enhancing operational performance after the Acquisition. Our Strategy We believe there are significant opportunities to further enhance our profitability, grow our business and expand our leadership in the Latin American and Caribbean QSR market by executing the following strategies: Table of Contents Focus Growth in Selected Countries. We believe we have significant opportunities to increase our presence and market share in those countries that we believe offer the best growth prospects and those that are most economically and financially stable, such as Brazil, Chile, Colombia, Mexico and Peru. For example, in many of the Territories, including Argentina, Brazil, Chile, Colombia, Ecuador, Mexico and Peru, we believe there are opportunities for growth as the ratio of gross domestic product purchase power parity, or GDP PPP, per McDonald s-branded restaurant, a measure we use to determine penetration, is at least 2.5 times greater than in the United States. As the macroeconomic conditions of the countries in the Territories continue to improve, we believe we will have significant opportunities to expand our business as consumers benefit from expanding purchasing power and higher levels of disposable income, which in turn increase consumer demand for our safe, fresh and good-tasting food, comfortable settings and affordable prices as aspects of food convenience. We expect to continue to open new restaurants opportunistically as we identify attractive markets throughout the Territories. In addition, we have committed to open at least 250 new restaurants throughout the Territories from 2011 to 2013 under our agreement with McDonald s, and in the first three years since the Acquisition (from August 3, 2007 to December 31, 2010), we exceeded our restaurant opening commitments under our agreement with McDonald s by 45.0%. We estimate that the cost to comply with our restaurant opening commitments under our MFAs with McDonald s, as described below, from 2011 to 2013 will be between $100 million and $250 million (not including restaurants we intend to open with the proceeds of the 2016 notes, as further described below), depending on, among other factors, the type and location of restaurants we open. Our expansion strategy seeks to continue capitalizing on the positive economic developments in these markets and the untapped demand to fuel our growth. Continue Our Restaurant Reimaging and Brand Extension Program. We are undertaking an extensive restaurant reimaging and brand extension program throughout the Territories. Our efforts focus on remodeling existing restaurants, creating an inviting, contemporary and highly aspirational environment. We seek to obtain compelling returns on investment, and our restaurants that have undergone reimaging have experienced an additional estimated 5.8% increase in sales per restaurant in the last three years over the comparable sales growth experienced by restaurants which have not been reimaged in the same period. As of June 30, 2011, 549, or 31.1%, of our restaurants had been opened or reimaged since the Acquisition. Our brand extension efforts focus on the development of additional McCaf locations and Dessert Centers. The McCaf concept differentiates the McDonald s brand and attracts new customers from different market segments to our existing restaurants, particularly during breakfast and after lunch. With an average return on investment from McCaf locations of 46.0% in the first half of 2011, the McCaf concept is well-suited for restaurants in large-scale shopping centers and commercial areas. McCaf locations have been a key factor in adding value to our customers experience and represented 8.9% of the total transactions and 5.1% of total sales of the restaurants in which they were located in the first half of 2011. Our Dessert Centers are conveniently located to attract customers, thereby serving as important transaction generators and providing an effective method of extending our brand presence to non-traditional areas. Dessert Centers represented 34.1% of our transactions and 11.3% of our total sales in the first half of 2011 and, with a return on investment of 206.8% in the first half of 2011, provide a low-risk investment alternative. From the Acquisition through June 30, 2011, we have opened 137 McCaf locations and 478 Dessert Centers. We believe our restaurant reimaging and brand extension program, which leverages McDonald s brand relevance and competitive position to generate growth, has been a key source of our growth since the Acquisition. Expand Product Offerings and Marketing Initiatives. We are required under our agreement with McDonald s to spend at least 5% of our sales on advertising and promotional activities. We intend to continue our promotional campaigns, such as our successful Big Pleasures, Small Prices value menu program in Brazil, through which we offer a rotating selection of our existing products at reduced prices, to increase traffic to our restaurants. We will continue to develop innovative and locally tailored product offerings, such as breakfast, bone-in-chicken, low-calorie and low-sodium products, and value items, to increase restaurant traffic and expand our customer base. To support these product offerings, we will Table of Contents sponsor regionally popular sporting events such as the Copa Libertadores soccer tournament and leverage global marketing initiatives led by McDonald s, such as sponsorship of major sporting events and participation in various movie promotions. We believe these branding events provide a cost-effective manner to increase our market recognition. Maintain Our Focus on Cost Savings Related to Operating Efficiencies. We are focused on streamlining our operations further by reducing costs at the corporate and operating level, including expanding our shared service center, which provides centralized administrative services such as payroll, accounts payable and accounts receivable. Additionally, we intend to further develop and increase our use of local suppliers where appropriate to reduce both import and transportation costs and the volatility of our supply costs. We continue to leverage our operating scale by centralizing our marketing and strategic operations, including menu management, Happy Meal promotions and designs, without losing sight of the need to cater to local preferences. We are currently rolling out a new kitchen operating platform in our major markets called Made For You, or MFY, which we believe will allow us to improve product quality and labor productivity and to reduce food waste. Our History and Relationship with McDonald s McDonald s Corporation has a longstanding history in Latin America and the Caribbean, dating to the opening of its first restaurant in Puerto Rico in 1967. Since then, McDonald s expanded its presence across the region as consumer markets and opportunities arose, opening its first stores in Brazil in 1979, in Mexico and Venezuela in 1985 and in Argentina in 1986. We commenced operations on August 3, 2007, as a result of the Acquisition of McDonald s LatAm business. Woods Staton, our Chairman, CEO and controlling shareholder, was the joint venture partner of McDonald s Corporation in Argentina for over 20 years prior to the Acquisition and also served as President of McDonald s South Latin America division from 2004 until the Acquisition. Our senior management team is comprised mostly of executives who had previously worked in McDonald s LatAm business or with Mr. Staton. We own our McDonald s franchise rights pursuant to a Master Franchise Agreement for all of the Territories except Brazil, which we refer to as the MFA, and a separate, but substantially identical, Master Franchise Agreement for Brazil, which we refer to as the Brazilian MFA. We refer to the MFA and the Brazilian MFA, as amended or otherwise modified to date, collectively as the MFAs. The MFAs set forth terms such as the initial 20-year terms of the franchises (our franchise rights for French Guiana, Guadeloupe and Martinique have 10-year terms which we have the option to extend by 10 years), our right to operate and franchise McDonald s-branded restaurants and the franchise fees payable by us to McDonald s. We offer McDonald s core menu items, including the Big Mac, Happy Meal and Quarter Pounder. Since the Acquisition through June 30, 2011, we have opened 253 new restaurants. We have also undertaken an extensive restaurant reimaging program throughout the Territories, expanded the number of McCaf and Dessert Center locations and focused on adding locally relevant menu items, such as breakfast, bone-in-chicken, low-calorie and low-sodium products, and value items. We have also integrated many of our operations, including our supply chain and distribution functions. Our Corporate Structure We were incorporated on December 9, 2010 under the laws of the British Virgin Islands as a direct, wholly-owned subsidiary of Arcos Dorados Limited, the prior holding company for the Arcos Dorados business. On December 13, 2010, Arcos Dorados Limited effected a downstream merger into and with us, with us as the surviving entity. Following the merger, we replaced Arcos Dorados Limited in the corporate structure and replicated its governance structure. We conduct substantially all our business through our indirect, wholly-owned Dutch subsidiary Arcos Dorados B.V. Our majority shareholder is Los Laureles Ltd., a British Virgin Islands company, which is beneficially owned by Mr. Staton, our Chairman and CEO. Under the MFAs, Los Laureles Ltd. is required to hold at all times at least 51% of our voting interests, which is accomplished through its ownership of 100% of the class B shares of Arcos Table of Contents Dorados Holdings Inc., each having five votes per share. Los Laureles Ltd. has established a voting trust with respect to the voting interests in us held by Los Laureles Ltd. and has contributed its interests in Los Laureles Ltd. to a trust whose sole beneficiaries are Mr. Staton and his descendants. See Principal and Selling Shareholders Los Laureles Ltd. Arcos Dorados B.V. owns all the equity interests of LatAm, LLC, the master franchisee, and owns, directly or indirectly, all the equity interests of the subsidiaries operating our restaurants in the Territories. On April 19, 2011, we completed our initial public offering and listed our class A shares on the New York Stock Exchange, or NYSE. In the initial public offering, we sold 9,529,412 class A shares and certain selling shareholders sold 74,977,376 class A shares, including 11,022,624 class A shares sold to the underwriters pursuant to the underwriters over-allotment option. The following chart shows our corporate structure after giving effect to the contemplated issuance and sale of 40,432,690 class A shares in this offering, assuming no exercise of the underwriters over-allotment option. (1) Los Laureles Ltd. is beneficially owned by Mr. Staton, our Chairman and CEO. See Principal and Selling Shareholders Los Laureles Ltd. (2) Includes operating subsidiaries held directly and, in some cases, indirectly through certain intermediate subsidiaries. Other than as described above, all of our significant subsidiaries are wholly owned by us, except Arcos Dorados Argentina S.A., of which Mr. Staton owns 0.03%. Recent Developments and Guidance On June 3, 2011, we declared a dividend totaling $12.5 million, which was paid on July 6, 2011 to our registered shareholders as of June 17, 2011. In October 2009, our subsidiary, Arcos Dorados B.V., issued senior notes for an aggregate principal amount of $450 million that mature on October 1, 2019 and bear interest of 7.5% per year, which we refer to as the 2019 notes. On June 13, 2011, Arcos Dorados B.V. exercised its option to redeem on July 18, 2011 a total of $141.4 million of the aggregate principal amount of the 2019 notes. Following the redemption, a total of $308.6 million of the Table of Contents aggregate principal amount of the 2019 notes remains outstanding. As a result of the redemption, we incurred a one-time loss of $13.9 million in July 2011, including $2.3 million related to the accelerated amortization of deferred financing costs and $11.6 million related to the redemption of the 2019 notes at a redemption price above the book value of the 2019 notes. In July 2011, we issued R$400 million aggregate principal amount of notes due 2016 bearing interest of 10.25% per year, payable in U.S. dollars, which we refer to as the 2016 notes. The 2016 notes are denominated in reais, but payment of principal and interest will be made in U.S. dollars. The 2016 notes mature on July 13, 2016. Interest will be paid semi-annually in arrears on January 13 and July 13 of each year, beginning on January 13, 2012. The proceeds from the issuance of the 2016 notes will be used to satisfy a capital expenditure program agreed upon with McDonald s, including to open at least 100 restaurants and to reimage others, and for general corporate purposes, including the settlement of our cross-currency interest rate swaps and our mirror swaps (as described below). On July 19, 2011 and July 20, 2011, we settled our cross-currency interest rate swaps and our mirror swaps, paying $95.5 million and collecting $3.9 million, respectively. As a result of these settlements, we recognized a loss amounting to $5.2 million in July of 2011, which includes accrued interest, the monthly effect of the change in the real forward rate curve and the cost of the unwind. On August 3, 2011, our subsidiary, Arcos Dorados B.V., entered into a committed revolving credit facility with Bank of America, N.A., as lender, for $50 million with a maturity date one year from the date of closing thereof. The obligations of Arcos Dorados B.V. under the revolving credit facility are jointly and severally guaranteed by certain of our subsidiaries on an unconditional basis. This revolving credit facility will permit us to borrow from time to time to cover our working capital needs and for other general corporate purposes. Finally, on September 13, 2011, we declared a dividend totaling $12.5 million, which was paid on October 5, 2011 to our registered shareholders as of September 27, 2011. Expectations for Third Quarter 2011 Results On a constant currency basis, our sales growth for the third quarter of 2011 improved upon the growth we experienced in the first half of the year. As evidence of this trend, we expect our systemwide comparable sales growth in the third quarter of 2011 to be within a range of 14.8% to 16.2%. However, in light of certain factors which have affected our results in prior periods and which we have previously reported, we expect our net income for the third quarter of 2011 when compared to the net income for the third quarter of 2010 to be negatively impacted by: an increase in compensation expense related to the outstanding awards granted under our long-term incentive plan (in light of the increase in the current quoted market price of our class A shares (based on a closing price of $23.19 per share as of September 30, 2011, compared to $21.09 as of June 30, 2011)), the one-time charges associated with the partial redemption of our 2019 Notes (as further described above), and the depreciation of certain local currencies against the U.S. dollar during September 2011, which primarily generated a non-cash charge over certain balance sheet accounts. This depreciation was offset, in part, by gains from certain foreign currency derivative transactions. We also expect that our effective tax rate for the third quarter of 2011 will be higher than our effective tax rate for the first half of 2011 as a result of several factors, including (i) the partial recovery of our valuation allowance related to our deferred tax assets during the first half of 2011 and (ii) withholding tax and additional expenses of our holding company. For a discussion of the factors we consider in determining our valuation allowance, see Management s Discussion and Analysis Critical Accounting Policies and Estimates Accounting for Income Taxes. As a result of these factors, for the three months ended September 30, 2011, we anticipate that our revenues will likely range from $970 to $990 million, our operating income will likely range from $69 to $75 million and our net income will likely range from $18 to $20 million, representing an approximately 23.0% to 25.5% increase, an approximately 0.4% to 9.1% increase and an approximately 38.2% to 31.3% decrease, respectively, as compared to the three months ended September 30, 2010. In the view of our management, the estimated financial information above was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management s knowledge and belief, our expected performance for the third quarter of 2011. However, this information is not fact and no assurances can be given that our actual systemwide comparable sales growth, revenues, operating income and net income for the three months ended September 30, 2011 will not differ from these estimated amounts. Readers of this prospectus are cautioned not to place undue reliance on the estimates. These estimated amounts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These estimated amounts are preliminary, are based on management s internal estimates and are subject to further internal review by management and approval by our audit committee. Neither our independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the estimated amounts contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the estimates. These estimated amounts may or may not be realized, and they may be based upon judgments or assumptions that prove to be incorrect. Our actual systemwide comparable sales growth, revenues, operating income and net income for the three months ended September 30, 2011 may vary from these estimated amounts. General Information Our principal executive offices are located at Roque Saenz Pe a 432, Olivos, Buenos Aires, Argentina (B1636 FFB). Our telephone number at this address is +54(11) 4711-2000. Our registered office in the British Virgin Islands is Maples Corporate Services (BVI) Limited, Kingston Chambers, P.O. Box 173, Road Town, Tortola, British Virgin Islands. Investors should contact us for any inquiries through the address and telephone number of our principal executive office. Our principal website is www.arcosdorados.com. The information contained on our website is not a part of this prospectus. Table of Contents

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+PROSPECTUS SUMMARY As used in this prospectus, references to the Company, we, our , us or Cassidy Ventures refer to Cassidy Ventures 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 Cassidy Ventures Inc. was incorporated on September 14, 2009, under the laws of the State of Nevada, for the purpose of conducting mineral exploration activities. We are an exploration stage company that has not realized any revenues to date, and our accumulated net loss as of September 30, 2011 is $ 46,660 . We anticipate that our current cash of $ 34,313 will be sufficient to operate our company for a period of one year from the date of this prospectus and complete the first and second phases of our planned exploration program on the Mobert mining claim. None of our officers and directors, or our consulting geologist, has ever visited the Mobert property. In Phase 1, we will make localized soil surveys, trenching and sampling over known and indicated mineralized zones. In Phase 2, we will make VLF-EM and magnetometer surveys. The third phase of our planned exploration program entails diamond drill testing, subject to the results of phases 1 and 2. We will require additional funding to proceed with phase 3 work on the claim; we have no current plans on how to raise the additional funding. We are an exploration stage company formed for the purposes of acquiring, exploring, and if warranted and feasible, developing natural resource property. We raised an aggregate of $47,500 through private placements of our securities. Proceeds from these placements were used to acquire a mineral property and for working capital. The Mobert property, comprised of 1 mining claim totaling 12 units and covering 190 hectares, 1.6 km long by roughly 1.2 km wide in a rectangular shape, is located in the south central part of the Black River Area Township within the Thunder Bay Mining Division of Northwestern Ontario, Canada and was recorded with the Ministry of Northern Development, Mines and Forestry, in the Province of Ontario, Canada on September 23, 2010. We had a qualified consulting geologist prepare a geological evaluation report on the claim. We intend to conduct exploratory activities on the claim and if feasible, develop the claim. Each of Edward Hayes and Linda Lamb, our two officers and directors, did not agree to serve as an officer or director of the Company at least in part due to a plan, agreement or understanding that he and she, respectively, 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 of Mr. Hayes and Ms. Lamb also confirms that he and she, respectively, has no such present intention. The Company s principal offices are located at #358 - 315 Place d Youville, Montreal, Quebec, Canada H2Y 0A4, and our telephone number is (514) 221-3017. THE OFFERING Securities offered: The selling stockholders are offering hereby up to 1,750,000 shares of common stock. Offering price: The selling stockholders will offer and sell their shares of common stock at a fixed price of $0.10 per share until our shares are quoted on the OTC Bulletin Board, if our shares of common stock are ever quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. Shares outstanding prior to offering: 6,750,000 Shares outstanding after offering: 6,750,000 Market for the common shares: There is no public market for our shares. Our common stock is not traded on any exchange or quoted 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 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 is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Use of proceeds: We will not receive any proceeds from the sale of shares by the selling security holders SUMMARY FINANCIAL INFORMATION The tables and information below are derived from our audited financial statements for the period from September 14, 2009 (Inception) to June 30, 2011, and our unaudited financial statements for the three months ended September 30, 2011. Our working capital as at September 30, 2011 was $ 30,952 . June 30, 2011 ($) Financial Summary (Audited) Cash and Deposits 39,379 Total Assets 45,267 Total Liabilities 5,075 Total Stockholder s Equity 40,192 Accumulated From September 14, 2009 (Inception) to June 30, 2011 ($) Statement of Operations Total Expenses 38,808 Net Loss for the Period 38,808 Net Loss per Share - September 30, 2011 ($) Financial Summary (Unaudited) Cash and Deposits 34,313 Total Assets 40,201 Total Liabilities 3,361 Total Stockholder s Equity 36,840 Accumulated From September 14, 2009 (Inception) to September 30, 2011 ($) Statement of Operations Total Expenses 46,660 Net Loss for the Period 46,660 Net Loss per Share -

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+S-1/A Registration No. 333-178245 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No.1 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AURA SYSTEMS, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 3662 95-4106894 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 1310 E. Grand Avenue El Segundo, California 90245 (310) 643-5300 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Melvin Gagerman Chief Executive Officer 1310 East Grand Avenue El Segundo, California 90245 (310) 643-5300 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Erick Richardson, Esq. Edgar D. Park, Esq. Richardson & Patel, LLP 1100 Glendon Avenue, Suite 850 Los Angeles, California 90024 Telephone: (310) 208-1182 Facsimile: (310) 208-1154 As soon as practicable after the effective date of this Registration Statement. (Approximate date of commencement of proposed sale to the public) 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. 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 (2) Proposed Maximum Aggregate Offering Price Amount of Registration Fee (1) Common stock, $0.0001 par value per share, to be issued upon conversion of Senior Secured Convertible Notes 6,517,000 $ 4,301,220 $ 492.92 Common stock, $0.0001 par value per share, to be issued upon exercise of Warrants 6,517,000 $ 4,301,220 $ 492.92 Total $ 985.84 (1) Calculated in accordance with Rule 457(c) of Regulation C promulgated under the Securities Act of 1933 as of November 23, 2011, and an average of the high and low prices reported on the OTC Bulletin Board on such date of $0.66 per share. This amount has been previously paid. (2) This registration statement also relates to an indeterminate number of shares of the Registrant s common stock that may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions in accordance with Rule 416 under the Securities Act of 1933, as amended. 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 this Registration Statement shall become effective on such date as the 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. THESE SECURITIES MAY NOT BE SOLD 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 ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED __________ PRELIMINARY PROSPECTUS 13,034,000 Shares of Common Stock AURA SYSTEMS, INC. This prospectus covers the resale by the selling security holders named on page 52 of up to 13,034,000 shares of our common stock which include: Up to 6,517,000 shares of common stock underlying senior secured convertible notes of the Company issued to investors on September 26, 2011, upon conversion of the notes; Up to 6,517,000 shares of common stock underlying common stock purchase warrants issued to investors on September 26, 2011, upon exercise of the warrants.

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+PROSPECTUS SUMMARY 1

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+contained elsewhere in this prospectus. To understand this offering fully, you should read the entire prospectus carefully, including the risk factors, the summary reserve reports and the financial statements and notes to those statements. Definitions for certain terms relating to the oil and natural gas business can be found in Glossary of Certain Oil and Natural Gas Terms and Terms Related to the Trust beginning on page 124. Ryder Scott Company, L.P., referred to in this prospectus as Ryder Scott, an independent engineering firm, provided the estimates of proved oil, natural gas liquids and natural gas reserves as of June 30, 2011 included in this prospectus. These estimates are contained in summaries prepared by Ryder Scott of its reserve reports for (a) the properties held by Chesapeake from which the royalty interests will be conveyed to the trust and (b) the royalty interests to be held by the trust. These reports are included as Annex A to this prospectus and are referred to in this prospectus as the reserve reports. References to Chesapeake in this prospectus are to Chesapeake Energy Corporation and, where the context requires, its subsidiaries. The royalty interests to be held by the trust are sometimes referred to herein as the trust properties. Unless otherwise indicated, all information in this prospectus assumes an initial public offering price of $20.00 per common unit (the midpoint of the price range set forth on the cover page of this prospectus) and no exercise of the underwriters option to purchase additional common units. Chesapeake Granite Wash Trust Chesapeake Granite Wash Trust is a Delaware statutory trust formed in June 2011 to own (a) royalty interests to be conveyed to the trust by Chesapeake in 69 existing horizontal wells in the Colony Granite Wash play located in Washita County in western Oklahoma (the Producing Wells ), and (b) royalty interests in 118 horizontal development wells (calculated as described under The Development Wells beginning on page 4) to be drilled exclusively in the Colony Granite Wash (the Development Wells ) on properties within an Area of Mutual Interest (as such area may be extended as described below, the AMI ). The AMI is limited to only the Colony Granite Wash formation and is depicted by the area identified in the inside front cover of this prospectus, currently consisting of approximately 45,400 gross acres (28,700 net acres) held by Chesapeake. The Colony Granite Wash is a formation encountered at depths between approximately 11,500 feet and 13,000 feet that lies between the top of the Des Moines formation (or top of Colony Granite Wash A ) and the top of the Prue formation (or base of Colony Granite Wash C ). Chesapeake intends to drill, or cause to be drilled, the Development Wells from proved undeveloped ( PUD ) drilling locations in the AMI by June 30, 2015 and is obligated to complete such drilling by June 30, 2016. The royalty interests will be conveyed from Chesapeake s interest in the Producing Wells and the Development Wells (the Underlying Properties ) effective as of July 1, 2011. As of July 1, 2011, 64 of the Producing Wells were producing from the Colony Granite Wash and the remaining five Producing Wells had been drilled and were awaiting completion. As of October 28, 2011, all of the Producing Wells were completed and producing. The royalty interest in the Producing Wells (the PDP Royalty Interest ) entitles the trust to receive 90% of the proceeds (exclusive of any production or development costs but after deducting post-production expenses and any applicable taxes) from the sale of production of oil, natural gas liquids and natural gas attributable to Chesapeake s net revenue interest in the Producing Wells. The royalty interest in the Development Wells (the Development Royalty Interest ) entitles the trust to receive 50% of the proceeds (exclusive of any production or development costs but after deducting post-production expenses and any applicable taxes) from the sale of oil, natural gas liquids and natural gas production attributable to Chesapeake s net revenue interest in the Development Wells. As of June 30, 2011 and after giving effect to the conveyance of the PDP Royalty Interest and the Development Royalty Interest to the trust, the total reserves estimated to be attributable to the trust were 44.3 mmboe (47.0% oil and natural gas liquids by volume). This amount includes 18.6 mmboe attributable to the PDP Royalty Interest and 25.7 mmboe attributable to the Development Royalty Interest. Table of Contents Index to Financial Statements EXPLANATORY NOTE This Amendment No. 6 to the Registration Statement on Forms S-1 and S-3 (Registration Nos. 333-175395 and 333-175395-01) of Chesapeake Granite Wash Trust and Chesapeake Energy Corporation ( Chesapeake ) is being filed to amend the section of the prospectus entitled Where You Can Find More Information to clarify that filings made by Chesapeake with the U.S. Securities and Exchange Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, that are incorporated by reference in the prospectus include those made after the date of the initial registration statement and prior to the effectiveness of the registration statement. Table of Contents Index to Financial Statements Generally, the percentage of production proceeds to be received by the trust with respect to a well will equal the product of (a) the percentage of proceeds to which the trust is entitled under the terms of the conveyances (90% for the Producing Wells and 50% for the Development Wells) multiplied by (b) Chesapeake s net revenue interest in the well. Chesapeake currently owns on average a 52.8% net revenue interest in the Producing Wells. Therefore, the trust will initially receive an average 47.5% net revenue interest in the Producing Wells. Chesapeake on average owns a 52.0% net revenue interest in the properties on which it expects to drill the Development Wells, and based on this net revenue interest, the trust would have an average 26.0% net revenue interest in the Development Wells. Chesapeake s actual net revenue interest in any particular Producing Well or Development Well may differ from these averages. Chesapeake will retain 10% of the proceeds from the sale of oil, natural gas liquids and natural gas attributable to its net revenue interest in the Producing Wells, and 50% of the proceeds from the sale of future production attributable to its net revenue interest in the Development Wells. Chesapeake initially will own 50% of the trust units (without giving effect to the exercise of the underwriters option to purchase additional common units). By virtue of Chesapeake s retained interest in the Producing Wells and the Development Wells, as well as its ownership of 50% of the trust units, it would have an effective average net revenue interest of 29.0% in the Producing Wells and 39.0% in the Development Wells, compared with an effective average net revenue interest for the holders of trust units other than Chesapeake of 23.8% in the Producing Wells and 13.0% in the Development Wells. The trust will not be responsible for any costs related to the drilling of the Development Wells or any other operating and capital costs. The trust s cash receipts in respect of the trust properties will be determined after deducting post-production expenses and any applicable taxes associated with the PDP Royalty Interest and the Development Royalty Interest. These post-production expenses will generally consist of costs incurred to gather, store, compress, transport, process, treat, dehydrate and market the oil, natural gas liquids and natural gas produced. However, the trust will not be responsible for costs of marketing services provided by Chesapeake. Cash distributions to unitholders will be increased or decreased by the effect of the trust s hedging arrangements related to oil and natural gas liquids production and reduced by trust expenses. The trust will be a party to hedging arrangements covering a portion of its oil and natural gas liquids production through September 30, 2015. As a party to these contracts, the trust will receive payments directly from its counterparties and be required to pay any amounts owed directly to its counterparties. The trust will hedge approximately 50% of the expected oil and natural gas liquids production and 37% of the trust s expected revenues (based on NYMEX strip oil prices as of October 28, 2011) upon which the target distributions from October 1, 2011 through September 30, 2015 are based. Following this offering, except in limited circumstances involving the restructuring of an existing hedge, the trust will have no ability to terminate its hedging arrangements or enter into additional hedges. Except in connection with the restructuring of an existing hedge, no production after September 30, 2015 will be hedged. The trust s royalty interests in the Underlying Properties will be pledged to the hedge counterparties to provide credit support for the hedge transactions, and the hedging counterparties may foreclose on such lien if, among other things, the trust or Chesapeake is in material default of the drilling, payment or reporting requirements under the hedging arrangements, subject to applicable cure and notice periods. Please see The Trust Hedging Arrangements beginning on page 48 and Target Distributions and Subordination and Incentive Thresholds beginning on page 52. The trust will make quarterly cash distributions of substantially all of its cash receipts, after deducting the trust s expenses, approximately 60 days following the completion of each quarter through (and including) the quarter ending June 30, 2031, except that the first distribution, which will cover the third quarter of 2011 (consisting of proceeds Table of Contents Index to Financial Statements 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 we are not soliciting an offer to buy these securities, in any state where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Issued November 8, 2011 23,375,000 Common Units Chesapeake Granite Wash Trust REPRESENTING BENEFICIAL INTERESTS This is an initial public offering of common units representing beneficial interests in Chesapeake Granite Wash Trust. The trust is selling all of the common units offered hereby. Chesapeake Energy Corporation ( Chesapeake ) will convey to the trust certain royalty interests in exchange for common and subordinated units collectively representing a 50% beneficial interest in the trust (without giving effect to the exercise of the underwriters option to purchase additional units), as well as all of the net proceeds of this offering. Prior to this offering, there has been no public market for the common units. Chesapeake anticipates that the initial public offering price will be between $19.00 and $21.00 per common unit. The common units have been approved for listing on the New York Stock Exchange under the symbol CHKR. The Trust Units. Trust units, consisting of common and subordinated units, are units representing undivided beneficial interests in the property of the trust. They do not represent any interest in Chesapeake. The Trust. The trust will own term and perpetual royalty interests in oil, natural gas liquids and natural gas properties leased by Chesapeake in the Colony Granite Wash play, located in Washita County, Oklahoma. These royalty interests will entitle the trust to receive, after the deduction of post-production expenses and taxes, (a) 90% of the proceeds attributable to Chesapeake s net revenue interest in the sale of production from 69 horizontal producing wells and (b) 50% of the proceeds attributable to Chesapeake s net revenue interest in the sale of production from 118 horizontal development wells to be drilled within an Area of Mutual Interest consisting of approximately 45,400 gross acres (28,700 net acres) held by Chesapeake. The number of wells required to be drilled may increase or decrease in proportion to Chesapeake s actual net revenue interest in each well and other factors described herein. The trust will not be responsible for any costs related to the drilling of these wells. The trust will be treated as a partnership for U.S. federal income tax purposes. The Trust Unitholders. As a trust unitholder, you will receive quarterly distributions of cash from the proceeds that the trust receives from Chesapeake s sale of oil, natural gas liquids and natural gas from properties subject to the royalty interests to be held by the trust. The amount of the distributions will be impacted by oil and natural gas liquids hedges to which the trust will be a party. For information on target distributions and related matters pertinent to trust unitholders, including Chesapeake s right to receive incentive distributions and ownership of subordinated units, please see Target Distributions and Subordination and Incentive Thresholds beginning on page 50. Investing in the common units involves a high degree of risk. See Risk Factors beginning on page 20. These risks include the following: Drilling for and producing oil, natural gas liquids and natural gas involves many risks that could delay the anticipated drilling schedule for the development wells and adversely affect future production, which could decrease cash distributions to unitholders. Price fluctuations for oil, natural gas liquids and natural gas could reduce proceeds to the trust and decrease cash distributions to unitholders. Actual reserves and future production may be less than current estimates. Estimates of target distributions to unitholders are based on assumptions that are inherently subjective and are subject to significant risks and uncertainties that could cause actual distributions to differ materially from estimates. Hedging arrangements will cover only a portion of the expected production attributable to the trust, and such arrangements will limit the trust s ability to benefit from commodity price increases for hedged volumes above the corresponding hedge price. If the trust were treated as a corporation for U.S. federal income tax purposes, then its cash available for distribution to unitholders would be substantially reduced. If the IRS contests the tax positions the trust takes, the value of the trust units may be adversely affected, the cost of any IRS contest will reduce the trust s cash available for distribution and income, gain, loss and deduction may be reallocated among trust unitholders. The tax treatment of an investment in trust units could be affected by potential legislative changes, possibly on a retroactive basis. PRICE $ A COMMON UNIT Price to Public Underwriting Discounts and Commissions(1) Proceeds to Trust(2) Per Common Unit $ $ $ Total $ $ $ (1) Excludes an aggregate structuring fee equal to 0.50% of the gross proceeds of this offering, or approximately $ million, payable to Morgan Stanley & Co. LLC and Raymond James & Associates, Inc. (2) The trust will deliver all of the proceeds it receives in this offering to a wholly owned subsidiary of Chesapeake. The trust has granted the underwriters an option to purchase up to an additional 3,506,250 common units. 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 underwriters expect to deliver the common units to purchasers on , 2011. MORGAN STANLEY RAYMOND JAMES Deutsche Bank Securities Goldman, Sachs & Co. Wells Fargo Securities , 2011 Table of Contents Index to Financial Statements attributable to July and August 2011 production), is expected to be made on or about December 28, 2011 to record unitholders on or about December 15, 2011. The Bank of New York Mellon Trust Company, N.A., as trustee, intends to withhold $1.0 million from the first distribution to establish an initial cash reserve available for trust expenses. The PDP Royalty Interest and the Development Royalty Interest will each consist of two separate royalty interests conveyed by Chesapeake to the trust: (a) a term royalty interest for a period of 20 years commencing on July 1, 2011 and ending on June 30, 2031 (such date is referred to as the Termination Date and such interests are referred to as the Term Royalties ) and (b) a perpetual royalty interest that does not terminate (together, the Perpetual Royalties ). The trust will dissolve and begin to liquidate on the Termination Date and will soon thereafter wind up its affairs and terminate. At the Termination Date, the Term Royalties will revert automatically to Chesapeake. Following the Termination Date, the Perpetual Royalties will be sold by the trust, and the net proceeds of the sale, as well as any remaining trust cash reserves, will be distributed to the unitholders pro rata. Chesapeake will have a right of first refusal to purchase the Perpetual Royalties from the trust following the Termination Date. Chesapeake currently operates 94% of the Producing Wells and expects to operate approximately 93% of the Development Wells until the completion of its drilling obligation. Chesapeake will market, or cause to be marketed, the oil, natural gas liquids and natural gas produced from the Underlying Properties. The conveyance instruments obligate Chesapeake to conduct operations and market production in good faith and in accordance with the Reasonably Prudent Operator Standard described under The Development Wells below. Prior to fulfilling its drilling obligation to the trust, Chesapeake may cause the trust to exchange leased acreage in the AMI for other leased acreage in the sections adjacent to the AMI (such adjacent sections are referred to as the Development Area ). If additional acreage in the Development Area becomes subject to the royalty interests, then the AMI will automatically expand to include such acreage. In addition, if Chesapeake acquires any additional leases or interests in the AMI, Chesapeake may make such additional leases or interests subject to the royalty interests of the trust with respect to any Development Wells subsequently drilled on such acreage. However, the aggregate acreage attributable to the exchanged leases or additional leases or acreage may not exceed five percent of the acreage initially subject to the royalty interests and the reserve profile of the newly burdened acreage must be consistent with the reserve profile of the acreage released by the trust. See Description of the Royalty Interests Additional Features of the Royalty Interests Exchange and Addition of Acreage on page 84. Following the satisfaction of its drilling obligation to the trust, Chesapeake may, without the consent or approval of the trust unitholders, sell all or any part of its retained interest in the Underlying Properties. In any such sale by Chesapeake, the Underlying Properties must be sold subject to and burdened by the trust s royalty interests, except that Chesapeake may require the trust to release the trust s royalty interests on such Underlying Properties with an aggregate value of up to $5.0 million during any 12-month period. In such event, the trust must receive an amount equal to the fair value to the trust of any royalty interests it sells. See Description of the Royalty Interests Additional Features of the Royalty Interests Sale and Release of Underlying Properties on page 84. The business and affairs of the trust will be managed by the trustee. The trustee will have no ability to manage or influence the operation of the Underlying Properties. Chesapeake will have no ability to manage or influence the management of the trust except through its limited voting rights as a holder of trust units. Please see Description of the Trust Units Voting Rights of Trust Unitholders beginning on page 93. The principal offices of the trust are located at 919 Congress Avenue, Suite 500, Austin, Texas 78701, and its telephone number is (512) 236-6599. Table of Contents Index to Financial Statements portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty. (iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (B) The project has been approved for development by all necessary parties and entities, including governmental entities. (v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. RYDER SCOTT COMPANY PETROLEUM CONSULTANTS A-13 Petroleum Reserves Definitions Table of Contents Index to Financial Statements Table of Contents Index to Financial Statements The Development Wells Pursuant to a development agreement with the trust, Chesapeake intends to drill, or cause to be drilled, 118 Development Wells in the AMI by June 30, 2015 and is obligated to complete such drilling by June 30, 2016. Chesapeake will be credited for drilling one full Development Well if the perforated length of the well is equal to or greater than 3,500 feet and Chesapeake s net revenue interest in the well is equal to 52.0%. For wells with a perforated length that is less than 3,500 feet, and for wells in which Chesapeake has a net revenue interest greater than or less than 52.0%, Chesapeake will receive proportionate credit. As a result, Chesapeake may be required to drill more or less than 118 wells in order to fulfill its drilling obligation. See The Trust Development Agreement and Drilling Support Lien beginning on page 46. Since July 1, 2011, Chesapeake has drilled and completed seven Development Wells and has drilled two additional wells in the AMI that are awaiting completion as of the date of this prospectus. Assuming the successful completion of these two wells, such wells will count toward the satisfaction of Chesapeake s drilling obligation. Until Chesapeake has satisfied its drilling obligation, it will not be permitted to drill or complete any well on lease acreage included within the AMI for its own account. For the life of the trust, Chesapeake will not be permitted to drill or complete any well that will have a perforated segment within 600 feet of any perforated interval of any Development Well or Producing Well. In drilling the Development Wells, Chesapeake is required to act diligently and as a reasonably prudent oil and gas operator would act under the same or similar circumstances as if it were acting with respect to its own properties, disregarding the existence of the royalty interests as burdens affecting such properties. We refer to this standard as the Reasonably Prudent Operator Standard. Where Chesapeake does not operate the Underlying Properties, Chesapeake is required to use commercially reasonable efforts to exercise its contractual rights to cause the operators of such Underlying Properties to adhere to the Reasonably Prudent Operator Standard. Chesapeake expects that the drilling and completion techniques used for the Development Wells will be generally consistent with those used for the Producing Wells and other Colony Granite Wash producing wells outside of the AMI. The proved undeveloped reserves reflected in the reserve reports assume that Chesapeake will drill and complete the 118 Development Wells with the same completion technique as the 69 Producing Wells. Chesapeake will grant to the trust a lien on its interest in the AMI (except the Producing Wells and any other wells that are already producing and not subject to the royalty interests) in order to secure the estimated amount of the drilling costs for the trust s interests in the Development Wells (the Drilling Support Lien ). The amount obtained by the trust pursuant to the Drilling Support Lien initially may not exceed $262.7 million. As Chesapeake fulfills its drilling obligation over time, Development Wells that are completed or that are perforated for completion and then plugged and abandoned will be released from the Drilling Support Lien and the total dollar amount that may be recovered by the trust for Chesapeake s failure to fulfill its drilling obligation will be proportionately reduced. As of the date of this prospectus, Chesapeake s drilling activity with respect to the Development Wells is consistent with the drilling schedule contemplated by the development agreement. The drilling schedule provides that approximately 30 wells are expected to be drilled each year until the drilling obligation is fulfilled. Underlying Properties The Underlying Properties are located in the Colony Granite Wash play in Washita County in western Oklahoma. The Colony Granite Wash is a subset of the greater Granite Wash plays of the Anadarko Basin. The Colony Granite Wash is situated at the eastern end of a series of Des Moines-age granite wash fields that extend along the southern flank of the Anadarko basin, approximately 60 miles into the Texas Panhandle. These granite wash fields were generally deposited as deep-water turbidites that result in relatively low risk, laterally extensive reservoirs. The productive members of the Colony Granite Wash are encountered between Table of Contents Index to Financial Statements approximately 11,500 and 13,000 feet and lie stratigraphically between the top of the Des Moines formation (or top of Colony Granite Wash A ) and the top of the Prue formation (or base of Colony Granite Wash C ). The individual productive members within the Colony Granite Wash may reach 200 feet or more in gross interval thickness and the targeted porosity zones within these individual members are generally 20 to 75 feet thick. The Colony Granite Wash is primarily a natural gas and natural gas condensate reservoir based on reserve volumes. However, oil and natural gas liquids production generates more revenue than natural gas production in the Colony Granite Wash due to prices that have historically been, and currently are, significantly higher for oil and natural gas liquids than for natural gas. Development costs for horizontal wells drilled and completed in the AMI average approximately $8.31 per boe, which is comparable to the development costs in other large-scale resource developments in the Mid-Continent in which Chesapeake operates. Chesapeake began drilling horizontal wells in the Colony Granite Wash in 2007. Chesapeake is the largest leaseholder in the Colony Granite Wash, with approximately 61,100 net acres (of which 28,700 net acres will be subject to the trust s royalty interests), the most active driller in the play, based on rig count, and the largest producer in the play. Since 2007, there have been 173 Des Moines horizontal wells drilled in the Colony Granite Wash. Of those 173 wells, Chesapeake has drilled 133 wells and participated in another 35 wells. As of June 30, 2011, there were 15 rigs drilling horizontal wells in the formation, with nine of those rigs drilling for Chesapeake. While horizontal wells are more expensive than vertical wells, a horizontal well increases the production of hydrocarbons and adds significant recoverable reserves per well. In addition, an operator can achieve better returns on drilling investments with horizontal drilling because the production from one horizontal well is equal to the production from several vertical wells. While Chesapeake is the most active company in this play, other operators in the Colony Granite Wash include publicly-listed companies such as Penn Virginia Corporation, Apache Corporation, QEP Resources, Inc., SM Energy Company and Marathon Oil Corporation, and privately-held companies such as Samson Oil & Gas Limited, Chaparral Energy, Inc. and Ward Petroleum Corporation. Target Distributions and Subordination and Incentive Thresholds Chesapeake has established quarterly target levels of cash distributions to unitholders for the life of the trust as set forth in Annex B to this prospectus. Actual cash distributions to the trust unitholders will fluctuate quarterly based on the quantity of oil, natural gas liquids and natural gas produced from the Underlying Properties, the prices received for such production, when Chesapeake receives payment for such production, payments under the hedge arrangements, the trust s expenses and other factors. As shown in Annex B, while target distributions initially increase as Chesapeake completes its drilling obligation and production increases, over time target distributions decline as a result of the depletion of the reserves in the Underlying Properties. While these target distributions do not represent the actual distributions you will receive with respect to your common units, they were used to calculate the subordination and incentive thresholds described in more detail below. The target distributions were derived by assuming that oil, natural gas liquids and natural gas production from the trust properties will equal the volumes reflected in the reserve reports included as Annex A to this prospectus and that prices received for such production will be consistent with spot and settled NYMEX pricing for July through November 2011, monthly NYMEX forward pricing as of October 28, 2011 for the remainder of the period ending June 30, 2014 and assumed price increases after June 30, 2014 of 2.5% annually, capped at $120.00 per bbl of oil and $7.00 per mmbtu of natural gas. Using these assumptions, the price of oil would reach the $120.00 per bbl cap in 2025 and the price of natural gas would reach the $7.00 per mmbtu cap in 2028. The target distributions also give effect to estimated post-production expenses, projected trust administrative expenses and actual production for July and August of 2011. In order to provide support for cash distributions on the common units, Chesapeake has agreed to subordinate 11,687,500 of the trust units it will retain following this offering, which will constitute 25% of the outstanding trust units. The subordinated units will be entitled to receive pro rata distributions from the trust each quarter if and to the extent there is sufficient cash to pay a cash distribution on the common units that is no less Table of Contents Index to Financial Statements than the applicable quarterly subordination threshold. If there is not sufficient cash to fund such a distribution on all of the common units, the distribution to be made with respect to the subordinated units will be reduced or eliminated for such quarter in order to make a distribution, to the extent possible, of up to the subordination threshold amount on all the common units, including the common units held by Chesapeake. Each quarterly subordination threshold is 20% below the target distribution level for the corresponding quarter (each, a subordination threshold ). In exchange for agreeing to subordinate a portion of its trust units, and in order to provide additional financial incentive to Chesapeake to satisfy its drilling obligation and perform operations on the Underlying Properties in an efficient and cost-effective manner, Chesapeake will be entitled to receive incentive distributions equal to 50% of the amount by which the cash available for distribution on all of the trust units in any quarter is 20% greater than the target distribution for such quarter (each, an incentive threshold ). The remaining 50% of cash available for distribution in excess of the incentive thresholds will be paid to trust unitholders, including Chesapeake, on a pro rata basis. By way of example, if the target distribution per unit for a particular quarterly period is $0.54, then the subordination threshold would be $0.43 and the incentive threshold would be $0.65 for such quarter. This means that if the cash available for distribution to all holders for that quarter would result in a per unit distribution below $0.43, the distribution to be made with respect to subordinated units will be reduced or eliminated in order to make a distribution, to the extent possible, up to the amount of the subordination threshold, on the common units. If, on the other hand, the cash available for distribution to all holders would result in a per unit distribution above $0.65, then Chesapeake would receive 50% of the amount by which the cash available for distribution on all the trust units exceeds $0.65, with all trust unitholders (including Chesapeake on a pro rata basis) sharing in the other 50% of such excess amount. See Target Distributions and Subordination and Incentive Thresholds beginning on page 52. At the end of the fourth full calendar quarter following Chesapeake s satisfaction of its drilling obligation with respect to the Development Wells, the subordinated units will automatically convert into common units on a one-for-one basis and Chesapeake s right to receive incentive distributions will terminate. After such time, the common units will no longer have the protection of the subordination threshold, and all trust unitholders will share on a pro rata basis in the trust s distributions. Chesapeake currently intends to complete its drilling obligation on or before June 30, 2015 and accordingly, Chesapeake expects the subordinated units will convert into common units on or before June 30, 2016. Chesapeake is obligated to complete its drilling obligation by June 30, 2016, in which event the subordinated units would convert into common units on or before June 30, 2017. The period during which the subordinated units are outstanding is referred to as the subordination period. Chesapeake s management has prepared the prospective financial information set forth below to present the target cash distributions to the holders of the trust units based on the estimates and assumptions described under Target Distributions and Subordination and Incentive Thresholds beginning on page 52. The accompanying prospective financial information was not prepared with a view toward complying with the regulations of the U.S. Securities and Exchange Commission (the SEC ) or the guidelines established by the American Institute of Certified Public Accountants with respect to preparation and presentation of prospective financial information. More specifically, such information omits items that are not relevant to the trust. Chesapeake s management believes the prospective financial information was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management s knowledge and belief, the expected course of action and the expected future financial performance of the royalty interests. However, this information is based on estimates and judgments, and readers of this prospectus are cautioned not to place undue reliance on the prospective production or financial information. Table of Contents Index to Financial Statements The prospective financial information included in this prospectus has been prepared by, and is the responsibility of, Chesapeake s management. PricewaterhouseCoopers LLP, the trust s and Chesapeake s independent registered public accountant, has neither examined, compiled nor performed any procedures with respect to the accompanying prospective financial information and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. The reports of PricewaterhouseCoopers LLP included or incorporated by reference in this prospectus relate to the Statement of Assets and Trust Corpus of the trust, the historical Statements of Revenues and Direct Operating Expenses of the Underlying Properties and the historical financial statements of Chesapeake. The reports do not extend to the prospective financial information and should not be read to do so. The following table sets forth the target distributions and subordination and incentive thresholds for each calendar quarter through the second quarter of 2017 (the last quarter for which subordinated units would be outstanding if Chesapeake does not complete its drilling obligation on or before June 30, 2016). The effective date of the conveyance of the royalty interests is July 1, 2011, which means that the trust will be credited with the proceeds of production attributable to the royalty interests from that date even though the trust properties will not be conveyed to the trust until the closing of this offering. Please see Calculation of Target Distributions below. The first distribution, which will cover the third quarter of 2011, is expected to be made on or about December 28, 2011 to record unitholders on or about December 15, 2011. Due to the timing of the payment of production proceeds to the trust, the trust expects that the first distribution will include royalties attributable to sales of oil, natural gas liquids and natural gas for two months (July and August 2011). Thereafter, quarterly distributions will generally include royalties attributable to sales of oil, natural gas liquids and natural gas for three months, including the first two months of the quarter just ended and the last month of the quarter prior to that one. The trustee intends to withhold $1.0 million from the first distribution to establish an initial cash reserve available for trust expenses. Table of Contents Index to Financial Statements Period Subordination Threshold(1) Target Distribution Incentive Threshold(1) (per unit) 2011: Third Quarter(2) $ 0.43 $ 0.54 $ 0.65 Fourth Quarter 0.54 0.68 0.82 2012: First Quarter 0.59 0.74 0.89 Second Quarter 0.61 0.76 0.91 Third Quarter 0.63 0.79 0.94 Fourth Quarter 0.67 0.84 1.01 2013: First Quarter 0.69 0.87 1.04 Second Quarter 0.69 0.86 1.04 Third Quarter 0.71 0.89 1.07 Fourth Quarter 0.69 0.86 1.04 2014: First Quarter 0.69 0.87 1.04 Second Quarter 0.68 0.85 1.02 Third Quarter 0.69 0.86 1.03 Fourth Quarter 0.66 0.83 0.99 2015: First Quarter 0.66 0.83 0.99 Second Quarter 0.68 0.85 1.02 Third Quarter 0.64 0.80 0.96 Fourth Quarter 0.56 0.70 0.84 2016 First Quarter 0.51 0.63 0.76 Second Quarter 0.47 0.58 0.70 Third Quarter 0.44 0.55 0.66 Fourth Quarter 0.41 0.52 0.62 2017 First Quarter 0.39 0.49 0.59 Second Quarter 0.37 0.47 0.56 (1) For each quarter, the subordination threshold equals 80% of the target distribution and the incentive threshold equals 120% of the target distribution. The subordination and incentive thresholds terminate after the fourth full calendar quarter following Chesapeake s completion of its drilling obligation. (2) Includes proceeds attributable to two months of actual production from July 1, 2011 to August 31, 2011, and gives effect to the establishment of $1.0 million of reserves for expenses withheld by the trustee. For additional information with respect to the subordination and incentive thresholds, please see Target Distributions and Subordination and Incentive Thresholds beginning on page 52. Table of Contents Index to Financial Statements Calculation of Target Distributions The following table presents the calculation of the target distributions for each quarter through and including the quarter ending June 30, 2012. The target distributions were prepared by Chesapeake based on assumptions of production volumes, pricing and other factors. The production forecasts used to calculate target distributions are based on estimates by Ryder Scott contained in the reserve reports. Payments to unitholders will be made approximately 60 days following the end of each calendar quarter, except that the first distribution is expected to be made on or about December 28, 2011 to record unitholders on or about December 15, 2011. Please read Target Distributions and Subordination and Incentive Thresholds Significant Assumptions Used to Calculate the Target Distributions beginning on page 58. Three Months Ending Period September 30, 2011(1)(2) December 31, 2011(1) March 31, 2012(1) June 30, 2012(1) (In thousands, except volumetric and per unit data) Estimated production from trust properties Oil sales volumes (mbbls) 133 176 181 181 Natural gas liquids sales volumes (mbbls) 218 298 302 304 Natural gas sales volumes (mmcf) 2,153 2,867 2,909 2,923 Total sales volumes (mboe) 710 952 967 972 % PDP sales volumes 98 % 84 % 69 % 61 % % PUD sales volumes 2 % 16 % 31 % 39 % % Oil volumes 19 % 19 % 19 % 19 % % Natural gas liquids volumes 31 % 31 % 31 % 31 % % Natural gas volumes 50 % 50 % 50 % 50 % Commodity price and derivative contract positions NYMEX price(3) Oil ($/bbl) $ 91.52 $ 85.43 $ 93.20 $ 93.00 Natural gas liquids ($/bbl) $ 45.06 $ 42.03 $ 45.85 $ 45.75 Natural gas ($/mmbtu) $ 4.36 $ 3.71 $ 4.00 $ 4.02 Assumed realized weighted unhedged price(4) Oil ($/bbl) $ 87.94 $ 81.85 $ 89.62 $ 89.41 Natural gas liquids ($/bbl) $ 42.66 $ 39.73 $ 43.47 $ 43.23 Natural gas ($/mcf) $ 3.12 $ 2.42 $ 2.76 $ 2.93 Assumed realized weighted hedged price(5) Oil ($/bbl) $ 87.94 $ 81.21 $ 85.37 $ 85.66 Natural gas liquids ($/bbl) $ 42.66 $ 39.41 $ 41.38 $ 41.38 Percent of oil volumes hedged 33.4 % 49.9 % 50.0 % Oil hedged price ($/bbl) $ $ 84.18 $ 84.74 $ 85.48 Percent of natural gas liquids volumes hedged 33.6 % 50.0 % 50.0 % Natural gas liquids hedged price ($/bbl) $ $ 41.41 $ 41.68 $ 42.05 Estimated cash available for distribution Oil sales revenues $ 11,736 $ 14,422 $ 16,184 $ 16,198 Natural gas liquids sales revenues 9,285 11,838 13,126 13,121 Natural gas sales revenues 6,707 6,945 8,038 8,578 Realized gains (losses) from derivative contracts (207 ) (1,398 ) (1,241 ) Operating revenues and realized gains (losses) from derivative contracts 27,729 32,998 35,951 36,656 Production taxes (1,023 ) (924 ) (987 ) (974 ) Trust administrative expenses(6) (1,327 ) (250 ) (250 ) (250 ) Total trust expenses (2,350 ) (1,174 ) (1,237 ) (1,224 ) Cash available for distribution $ 25,379 $ 31,825 $ 34,714 $ 35,432 Trust units outstanding 46,750 46,750 46,750 46,750 Target distribution per trust unit $ 0.54 $ 0.68 $ 0.74 $ 0.76 Subordination threshold per trust unit $ 0.43 $ 0.54 $ 0.59 $ 0.61 Incentive threshold per trust unit $ 0.65 $ 0.82 $ 0.89 $ 0.91 Table of Contents Index to Financial Statements (1) The three months ending September 30, 2011 include proceeds attributable to two months of production from July 1, 2011 to August 31, 2011. Thereafter, quarterly distributions will generally include royalties attributable to sales of oil, natural gas liquids and natural gas for three months, including the first two months of the quarter just ended as well as the last month of the quarter prior to that one. (2) The three months ending September 30, 2011 reflect historical production volumes for July and August 2011 and management estimates of production taxes for July and August 2011. (3) Average NYMEX spot, settled and futures prices, as reported October 28, 2011. For a description of the effect of lower NYMEX prices on target cash distributions, please read Target Distributions and Subordination and Incentive Thresholds Sensitivity of Target Distributions to Changes in Oil, Natural Gas Liquids and Natural Gas Prices and Volumes beginning on page 63. (4) Sales price net of forecasted gravity quality, btu content, transportation costs, and marketing costs. For information about the estimates and assumptions made in preparing the table above, see Target Distributions and Subordination and Incentive Thresholds Significant Assumptions Used to Calculate the Target Distributions beginning on page 58. (5) No hedging arrangements will cover natural gas. (6) Includes the establishment of an initial cash reserve of $1.0 million for trust expenses in period ending September 30, 2011. Chesapeake Energy Corporation Chesapeake is the second-largest producer of natural gas, is among the top 15 producers of oil and natural gas liquids and is the most active driller, based on rig count, of new oil and natural gas wells in the U.S. Chesapeake s operations are focused on discovering and developing unconventional natural gas and oil fields onshore in the U.S. Chesapeake owns leading positions in the Barnett, Haynesville, Bossier, Marcellus and Pearsall natural gas shale plays and in the Granite Wash, Cleveland, Tonkawa, Mississippian, Bone Spring, Avalon, Wolfcamp, Wolfberry, Eagle Ford, Niobrara, Frontier, Codell, Bakken/Three Forks and Utica unconventional liquids plays. It has also vertically integrated its operations and owns substantial midstream, compression, drilling and oilfield service assets. As of June 30, 2011, Chesapeake had total assets of approximately $36.7 billion and total estimated net proved reserves of 16.5 tcfe. Chesapeake has approximately 61,100 net acres leased in the Colony Granite Wash and as of June 30, 2011, Chesapeake was operating nine rigs in the Colony Granite Wash. Chesapeake s principal executive offices are located at 6100 North Western Avenue, Oklahoma City, Oklahoma 73118 and its telephone number is (405) 848-8000. Chesapeake s website is www.chk.com; however, the information contained on Chesapeake s website is not incorporated by reference into this prospectus. The trust units do not represent interests in or obligations of Chesapeake. Key Investment Considerations The following are some key investment considerations related to the Underlying Properties, the royalty interests and the common units: The royalty interests being contributed to the trust are from the highly-productive Colony Granite Wash Play. The existing Producing Wells and the Development Wells to be drilled target the Colony Granite Wash play within the broader Granite Wash formation of the Anadarko Basin, which is the largest non-shale resource play in the Mid-Continent. This highly-productive play has been a focus area for recent development, with 173 horizontal wells targeting the Des Moines formation drilled in the Colony Granite Wash since 2007. Of those 173 wells, Chesapeake has drilled 133 wells and participated in another 35 wells. As of June 30, 2011, there were 15 active rigs drilling horizontal wells in the play, with nine of those rigs drilling for Chesapeake. Liquids-weighted revenue and production profiles provide long-term exposure to oil prices. Over the 20-year producing life of the trust, 72% of net revenues (based on October 28, 2011 strip prices) and 48% of production are projected to be derived from oil and natural gas liquids. Although natural gas Table of Contents Index to Financial Statements liquids typically sell for less than oil on a volume equivalency basis, natural gas liquids prices have historically been highly correlated with oil prices. As a result, the unhedged portion of liquids revenues during the hedge period and all liquids revenues beyond the hedge period are directly exposed to oil prices, and the amount of trust distributions and consequently trust performance is expected to be highly correlated to fluctuations in the price of oil. Royalty interests not burdened by operating or capital costs. The trust will not be responsible for any operating or capital costs associated with the Underlying Properties, including the costs to drill and complete the Development Wells. The trust will bear its proportionate share of post-production expenses, any applicable taxes and trust expenses. Exposure to oil and natural gas liquids price volatility mitigated through September 30, 2015. The trust will be a party to hedging arrangements covering a portion of the trust s expected oil and natural gas liquids production through September 30, 2015. The trust will hedge approximately 50% of the expected oil and natural gas liquids production and approximately 37% of the trust s expected revenues (based on NYMEX strip oil prices as of October 28, 2011) upon which the target distributions from October 1, 2011 through September 30, 2015 are based. These hedging arrangements are expected to reduce the trust s exposure to fluctuations in the prices of oil through the third quarter of 2015. Alignment of interests between Chesapeake and the trust unitholders. Chesapeake has significant incentives to complete its drilling obligation and increase production from the Underlying Properties as a result of the following factors: Chesapeake will initially have a significant economic interest in the Underlying Properties through its 50% retained interest in the Development Wells, 10% retained interest in the Producing Wells and its ownership of approximately 50% of the trust units. A portion of the trust units that Chesapeake will own, constituting 25% of the total outstanding trust units, will be subordinated units that will not be entitled to receive distributions unless there is sufficient cash to pay the subordination threshold amount to the common units. In addition, these subordinated units will only convert into common units at the end of the fourth full calendar quarter following Chesapeake s satisfaction of its drilling obligation to the trust. To the extent that the trust has cash available for distribution in excess of the incentive thresholds during the subordination period, Chesapeake will be entitled to receive 50% of such cash as incentive distributions, plus its pro rata share of the remaining 50% of such cash by virtue of its ownership of 23,375,000 total units. Chesapeake will not be permitted to drill or complete any wells for its own account within the AMI or sell the Underlying Properties until it has satisfied its drilling obligation. If Chesapeake does not fulfill its drilling obligation by June 30, 2016, the trust may foreclose on the Drilling Support Lien on the Underlying Properties. See The Trust Development Agreement and Drilling Support Lien beginning on page 46. The Colony Granite Wash represents a core asset for Chesapeake. The approximately 61,100 net acres held by Chesapeake in the Colony Granite Wash represent one of its core assets. Chesapeake has grown its position in the Colony Granite Wash since it began drilling horizontal wells there in 2007 based on its belief that the formation can provide attractive returns on invested capital and its belief that the play will further Chesapeake s goal of increasing the proportion of its liquids production. As of June 30, 2011, Chesapeake had nine rigs drilling horizontal wells in the Colony Granite Wash. Chesapeake is an experienced operator in the Colony Granite Wash. Since 2007, Chesapeake has drilled, as operator, 133 of the 173 horizontal wells drilled by the industry in the Colony Granite Wash to date, 131 of which are completed and the remaining two of which are awaiting completion and expected to be Table of Contents Index to Financial Statements productive. Of the 133 horizontal wells drilled by Chesapeake in the Colony Granite Wash, 125 are located in Washita County, in which the Underlying Properties are located. Chesapeake expects to operate approximately 93% of the Development Wells until the completion of its drilling obligation, allowing Chesapeake to control the timing and amount of discretionary expenditures for operational and development activities with respect to the majority of the Development Wells. The Colony Granite Wash is serviced by well-developed gathering systems and transportation pipelines. Chesapeake s affiliate, Chesapeake Midstream Partners, L.P. ( Chesapeake Midstream Partners ), provides Chesapeake with gathering, treating and compression services for natural gas produced in the Colony Granite Wash and is expected to continue to provide these services with respect to substantially all of the natural gas and natural gas liquids produced by the Underlying Properties. The natural gas gathering systems are connected to an extensive intrastate natural gas transportation pipeline system owned by Enogex LLC ( Enogex ), a subsidiary of publicly-held OGE Energy Corp. Chesapeake s wholly owned subsidiary, Chesapeake Midstream Development, L.P. ( Chesapeake Midstream Development ), gathers oil production from the Colony Granite Wash through its gathering systems and third parties gather other oil by truck. The oil is further transported to Plains All American Pipeline, L.P. ( Plains ), a publicly-held master limited partnership, through its pipeline and by truck. The well-developed gathering systems in the Colony Granite Wash and Chesapeake s affiliation with the primary service providers allow close coordination regarding the availability of midstream services and reduce the risk that such services would not be available as Development Wells are drilled. Rigs and services readily available to allow timely drilling and completion of wells. Chesapeake s substantial oilfield service operations, including drilling rigs, pressure pumping equipment, trucking, oilfield tools, location and road construction and roustabout services, support its drilling activities and will allow Chesapeake to manage the development of the trust s leasehold efficiently and strategically. As of June 30, 2011, Chesapeake had nine drilling rigs operating in the Colony Granite Wash and owned or leased a total of 133 drilling rigs, which it uses to drill wells for its own account. Chesapeake estimates that only four to five rigs will be required to complete its drilling obligation within its contractual commitment to the trust. Chesapeake may use a combination of its own rigs and oilfield service businesses and third party rigs and services to drill and complete the Development Wells. Chesapeake s direct access to drilling rigs and related oilfield services should substantially mitigate any potential shortage of drilling and completion equipment and enable Chesapeake to achieve its projected drilling schedule. Potential for initial depletion to be offset by results of development drilling. Chesapeake intends to drill, or cause to be drilled, all of the Development Wells on PUD drilling locations in the AMI by June 30, 2015 and is obligated to complete such drilling by June 30, 2016. Furthermore, Chesapeake is incentivized to increase production in the near term due to its substantial ownership of trust units, the subordination and incentive distribution provisions of those units and its retained interest in the Underlying Properties. While production from the trust properties will decline over the long term, the anticipated production from the Development Wells is expected to more than offset depletion of the Producing Wells during the drilling period. Recognized sponsor with a successful track record and active drilling program. Chesapeake maintains the industry s most active drilling program, based on rig count. In 2010, Chesapeake drilled 1,445 gross (938 net) operated wells and participated in another 1,586 gross (211 net) wells operated by other companies. Chesapeake s drilling success rate in 2010 was 98% for both company-operated and non-operated wells. Daily production for 2010 averaged 2.836 bcfe, an increase of 355 mmcfe, or 14%, over the 2.481 bcfe of daily production for 2009, and consisted of 2.534 bcf of natural gas (89% on a natural gas equivalent basis) and 50,397 bbls of oil and natural gas liquids (11% on a natural gas equivalent basis). 2010 was Chesapeake s 21st consecutive year of production growth. Table of Contents Index to Financial Statements Proved Reserves Proved Reserves of Underlying Properties and Royalty Interests. The following table sets forth certain estimated proved reserves and the PV-10 value as of June 30, 2011 attributable to the Underlying Properties, the PDP Royalty Interest and the Development Royalty Interest, in each case derived from the reserve reports. The reserve reports were prepared by Ryder Scott in accordance with criteria established by the SEC. Proved reserve quantities attributable to the royalty interests are calculated by multiplying the gross reserves for each property attributable to Chesapeake s interest by the royalty interest assigned to the trust in each property. The reserves related to the Underlying Properties include all proved reserves expected to be economically produced during the life of the properties. The reserves attributable to the trust s interests include only the reserves attributable to the Underlying Properties that are expected to be produced within the 20-year period prior to the Termination Date as well as the residual 50% interest in the royalty interests that the trust will own on the Termination Date and subsequently sell. A summary of the reserve reports is included as Annex A to this prospectus. Proved Reserves(1) Oil (mbbl) Natural Gas Liquids (mbbl) Natural Gas (mmcf) Total (mboe) PV-10 Value(2) (In thousands) Underlying Properties: Developed 2,648 7,791 75,689 23,054 343,504 Undeveloped 8,290 18,640 179,931 56,919 510,087 Total 10,938 26,431 255,620 79,973 853,591 Royalty Interests: Developed (90%) 2,233 6,235 60,536 18,557 325,434 Undeveloped (50%) 4,002 8,319 80,325 25,709 485,706 Total 6,235 14,554 140,861 44,266 811,140 (1) The proved reserves were determined using a 12-month unweighted arithmetic average of the first-day-of-the-month prices for oil, natural gas liquids and natural gas for the period from July 1, 2010 through June 1, 2011, without giving effect to derivative transactions, and were held constant for the life of the properties. The prices used in the reserve reports, as well as Chesapeake s internal reports, yield weighted average prices at the wellhead, which are based on first-day-of-the-month reference prices and adjusted for transportation and regional price differentials and, for the royalty interests, costs of marketing services provided by Chesapeake affiliates, which will not be charged to the trust. The reference prices and the equivalent weighted average wellhead prices as of June 30, 2011 are presented in the table below. Oil (per bbl) Natural gas liquids (per bbl) Natural gas (per mcf) Trailing 12-month average pricing $ 89.86 $ 89.86 $ 4.21 Weighted average wellhead prices (Underlying Properties) $ 86.08 $ 39.83 $ 2.93 Weighted average wellhead prices (royalty interests) $ 86.09 $ 39.80 $ 2.86 (2) PV-10 is the present value of estimated future net revenue to be generated from the production of proved reserves, discounted using an annual discount rate of 10% (as required by the SEC), calculated without deducting future income taxes. PV-10 is a non-GAAP financial measure and generally differs from standardized measure of discounted net cash flows, or Standardized Measure, the most directly comparable GAAP financial measure, because it does not include the effects of income taxes on future net revenues. Because the historical financial information related to the Underlying Properties consists solely of revenues and direct operating expenses and does not include the effect of income taxes, we expect the PV-10 and Standardized Measure attributable to the Underlying Properties for each period to be the same. Because the trust will not bear federal income tax expense, we also expect the PV-10 and Standardized Measure attributable to the royalty interests for each period to be the same. Neither PV-10 nor Standardized Measure represents an estimate of the fair market value of the Underlying Properties or the royalty interests. We and others in our industry use PV-10 as a measure to compare the relative size and value of proved reserves held by companies without regard to the specific tax characteristics of such entities. PV-10 for the royalty interests has been calculated without deduction for production and development costs, as the trust will not bear those costs. Table of Contents Index to Financial Statements At the Termination Date, the estimated reserves attributable to the residual 50% interest in the royalty interests that the trust will own on the Termination Date and subsequently sell are 5.0 mmboe. The PV-10 value of such reserves calculated using 12-month trailing SEC pricing as of June 30, 2011 is $9.2 million. Underlying Production Attributable to Target Distributions. The following production bar graph summarizes estimated production underlying trust revenues used to determine Target Distributions. (1) Due to the July 1, 2011 effective date of the royalty interests and the timing of payments received by the trust for production in determining Target Distributions, the 2011 production forecast includes production from July 1, 2011 through November 30, 2011. (2) Due to the June 30, 2031 termination date of the trust and the timing of payments received by the trust for production in determining Target Distributions, the 2031 production forecast includes production from December 1, 2030 to June 30, 2031. (3) Net production for 2011 includes historical production volumes for July and August 2011. Table of Contents Index to Financial Statements

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+Cost of Sales - Intellectual Property Licenses We recorded cost of sales - intellectual property licenses of $73,538 for the fiscal year ended March 31, 2011 compared to $19,057 for the fiscal year ended March 31, 2010, an increase of $54,481. The increase in cost of sales intellectual property licenses was due to the revenue increase noted above. Cost of sales - intellectual property licenses consists of certain royalty expenses, amortization of prepaid royalty costs and amortization of certain intangible assets. In the fiscal years ended March 31, 2011, and 2010, all of the cost of sales intellectual property licenses related to royalties for the Left Behind, Keys of the Kingdom and Charlie Church Mouse games as noted below: Fiscal Year Ended March 31, 2011 2010 Left Behind License $ 59,783 $ 3,196 Charlie Church Mouse License 600 10,155 Keys of the Kingdom License 13,155 5,706 Total Cost of Sales - intellectual Property Costs $ 73,538 $ 19,057 Selling, General and Administrative Expenses Selling, general and administrative expenses were $929,815 for the fiscal year ended March 31, 2011, compared to $1,038,790 for the fiscal year ended March 31, 2010, a decrease of $108,975 or 10%. This decrease was primarily the result of a credit of $119,535 in the prior year related to the reversal of a lease-related reserve for an abandoned office space. Consulting and Professional Fees Consulting and professional fees were $1,918,430 for the fiscal year ended March 31, 2011, compared to $9,193,481 for the fiscal year ended March 31, 2010, a decrease of $7,275,051, or 79%. This decrease was largely due to a $5,563,764 reduction in payments to our marketing consultants, which in turn was driven by a $4,618,000 decrease in the cost of share-based payments under convertible notes to consultants The reason for this significant change was because our consulting arrangements, which have since been terminated, were based upon a number of shares to be issued monthly if converted. Accordingly, based upon fair-value accounting rules the price of our stock determined the amount of each expense, rather than the cash amount converted into shares. Salaries and Wages Wages and salaries were $1,606,636 for the fiscal year ended March 31, 2011, compared to $4,152,041 for the fiscal year ended March 31, 2010, a decrease of $2,545,405 or 61%. We paid certain of our employees and directors in shares of restricted common stock rather than in cash. During the fiscal years ended March 31, 2011 and 2010, we recorded expenses relating to these non-cash payments to employees and directors of $203,981 and $3,657,100, a decrease of $3,453,119. The non-cash payments in the fiscal year ended March 31, 2010 included stock issued to our CEO, Troy Lyndon, equal to $3,270,100 and our Director, Richard Knox, Jr. equal to $327,000. The non-cash payments in the fiscal year ended March 31, 2011 were to a number of full-time and part-time employees. Product Development Expenses Product development expenses were $1,680,578 for the fiscal year ended March 31, 2011 compared to $1,600,807 for the fiscal year ended March 31, 2010, an increase of $79,771, or 5%. This increase was due to greater fees paid under the Cloud 9 license. Other Income and Expenses We recorded other expense of $182,825 in the fiscal year ended March 31, 2011. This other expense was all related to our interest expense and loss on settlement of debt. We recorded other expense of $5,380,855 in the fiscal year ended March 31, 2010. This other expense was all related to our interest expense, including $336,498 in amortization of debt discounts, $2,770,899 related to induced conversions of our convertible notes payable and $2,204,434 of a loss on settlement of debt due to the fair value of our common stock exceeded the carrying value of the related debt that was settled. Net Loss As a result of the above factors, we reported a net loss of $5,487,843 for the fiscal year ended March 31, 2011, compared to a net loss of $21,327,855 for the fiscal year ended March 31, 2010, resulting in a decreased loss of $15,840,012. In addition, our accumulated deficit at March 31, 2011, totaled $70,870,169. These increases are attributable primarily to the factors discussed above. LIQUIDITY AND CAPITAL RESOURCES At June 30, 2011, we had $24,616 of cash compared to $21,180 of cash at March 31, 2011, an increase of $3,436. At June 30, 2011, we had a working capital deficit of $1,854,791 compared to a working capital deficit of $1,633,122 at March 31, 2011. Operating Activities For the three month periods ended June 30, 2011 and 2010, net cash used in operating activities was $313,276 and $435,036, respectively. The net losses for the three month periods ended June 30, 2011 and 2010 were $1,150,025 and $2,912,802, respectively, a decrease of $1,762,777. Investing Activities We did not invest in fixed assets during the three month period ended June 30, 2011 compared to an investment of $14,447 in the 2010 period. Financing Activities For the three month periods ended June 30, 2011 and 2010, net cash provided by financing activities was $286,812 and $409,588, respectively. The primary elements of cash provided by financing activities in both periods were the sale of common stock and borrowings under notes payable. Future Financing Needs Since our inception in August 2002 through June 30, 2011, we have raised approximately $14 million through funds provided by private placement offerings and convertible notes. This was sufficient to enable us to develop our first product and expand our product line to include 11 games. Although we expect this trend of financing our business through private placement offerings to continue, we can make no guarantee that we will be adequately financed going forward. We do not currently have enough capital to sustain our operations for the next 12 months. We will need to continue raising capital through privately placed offerings in order to continue our operations over the next 12 months. It is also anticipated that in the event we are able to continue raising funds at a pace that exceeds our minimum capital requirements, we may elect to spend cash to expand operations or take advantage of business and marketing opportunities for our long-term benefit. Additionally, we intend to continue to use equity whenever possible to finance marketing, public relations and development services that we may not otherwise be able to obtain without cash. To date, we have financed our operations primarily through the sale of shares of our common stock and through the issuance of debt instruments. During the three months ended June 30, 2011, we raised $159,812 of cash through the sale of common stock to certain accredited investors. We continue to generate operating losses. We are currently authorized to issue up to 10 billion shares of common stock. To date, 8,483,677,147 shares of common stock are issued and outstanding. In addition, we have reserved 1 billion shares of common stock for issuance under our 2011 Stock Incentive Plan and are obligated to issue an aggregate of 425,000,000 shares of common stock pursuant to securities exercisable or convertible into shares of common stock. In order to raise additional capital through the issuance of shares of common stock or securities exercisable or convertible into shares of common stock, we will have increase our authorized common stock which requires us to file an Information Statement with the Securities and Exchange Commission and an Amendment to our Articles of Incorporation with the Secretary of State of the State of Nevada. Furthermore, the report by our Independent Registered Public Accounting Firm on our financial statements includes a paragraph describing substantial doubt about our ability to continue as a going concern as of and for the year ended March 31, 2011. Going Concern The accompanying consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. Since our inception, we have an accumulated deficit of $72,020,194. We have suffered continuing losses from operations and have negative working capital of $1,854,791, which, among other matters, raises substantial doubt about our ability to continue as a going concern. A significant amount of additional capital will be necessary to advance the development and distribution of our products to the point at which they may generate sufficient gross profits to cover our operating expenses. We intend to fund operations through debt and/or equity financing arrangements, which management believes may be insufficient to fund our capital expenditures, working capital and other cash requirements (consisting of accounts payable, accrued liabilities, amounts due to related parties and amounts due under various notes payable) for the fiscal year ending March 31, 2012. Therefore, we will be required to seek additional funds to finance our long-term operations. We are currently addressing our liquidity issue by continually seeking investment capital through the public markets, specifically, through private placements of common stock and debt. However, no assurance can be given that we will receive any funds in addition to the funds we have received to date. The successful outcome of future activities cannot be determined at this time and there is no assurance that, if achieved, we will have sufficient funds to execute our intended business plan or generate positive operating results. The consolidated financial statements do not include any adjustments related to recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should we be unable to continue as a going concern. Critical Accounting Policies Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, however, in the past the estimates and assumptions have been materially accurate and have not required any significant changes. Specific sensitivity of each of the estimates and assumptions to change based on other outcomes that are reasonably likely to occur and would have a material effect is identified individually in each of the discussions of the critical accounting policies described below. Should we experience significant changes in the estimates or assumptions which would cause a material change to the amounts used in the preparation of our financial statements, material quantitative information will be made available to investors as soon as it is reasonably available. We believe the following critical accounting policies, among others, affect our more significant judgments and estimates used in the preparation of our consolidated financial statements: Software Development Costs. Research and development costs, which consist of software development costs, are expensed as incurred. Software development costs primarily include payments made to independent software developers under development agreements. Accounting standards provide for the capitalization of certain software development costs incurred after technological feasibility of the software is established or for the development costs that have alternative future uses. We believe that the technological feasibility of the underlying software is not established until substantially all product development is complete, which generally includes the development of a working model. No software development costs have been capitalized to date. Impairment of Long-Lived Assets. We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future net cash flows expected to be generated by the assets. If the assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the present value of estimated future cash flows. At June 30, 2011, our management believes there is no impairment of our long-lived assets other than the lease-hold improvements of its abandoned office space and certain trademark costs both of which have been written off in the fiscal year ended March 31, 2008. There can be no assurance however; that market conditions will not change or that there will be demand for our products, which could result in impairment of long-lived assets in the future. Stock-Based Compensation. Effective April 1, 2006, on the first day of our fiscal year 2006, we adopted the fair value recognition provisions of the accounting standards applied at that time, using the modified-prospective transition method. Under this transition method, compensation cost recognized in the fiscal year ended March 31, 2007 includes: (a) compensation cost for all share-based payments granted and not yet vested prior to April 1, 2006, based on the grant date fair value estimated in accordance with the accounting standards, and (b) compensation cost for all share-based payments granted subsequent to March 31, 2006 based on the grant-date fair value estimated in accordance with the provisions of accounting standards. Accounting standards requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. As of March 31, 2008, we had no options outstanding and therefore believe the adoption of this accounting standard had an immaterial effect on the accompanying consolidated financial statements. Stock-based awards to non-employees are accounted for using the fair value method in accordance with accounting standards. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the third-party performance is complete or the date on which it is probable that performance will occur. We account for stock-based awards to non-employees by using the fair value method. In accordance with accounting standards, an asset acquired in exchange for the issuance of fully vested, non-forfeitable equity instruments should not be presented or classified as an offset to equity on the grantor s balance sheet once the equity instrument is granted for accounting purposes. Accordingly, we have recorded the fair value of the common stock issued for certain future consulting services as prepaid expenses in its consolidated balance sheet. Revenue Recognition. We evaluate the recognition of revenue based on the criteria set forth in accounting standards. We evaluate revenue recognition using the following basic criteria and recognize revenue when all four of the following criteria are met: Persuasive evidence of an arrangement exists: Evidence of an agreement with the customer that reflects the terms and conditions to deliver products must be present in order to recognize revenue. Delivery has occurred: Delivery is considered to occur when the products are shipped and risk of loss and reward have been transferred to the customer. The seller s price to the buyer is fixed and determinable: If an arrangement includes rights of return or rights to refunds without return, revenue is recognized at the time the amount of future returns or refunds can be reasonably estimated or at the time when the return privilege has substantially expired in accordance with SFAS No. 48, Revenue Recognition When Right of Return Exists. If an arrangement requires us to rebate or credit a portion of our sales price if the customer subsequently reduces its sales price for our product to its customers, revenue is recognized at the time the amount of future price concessions can be reasonably estimated, or at the time of customer sell-through. Collectibility is reasonably assured: At the time of the transaction, we conduct a credit review of each customer involved in a significant transaction to determine the creditworthiness of the customer. Collection is deemed probable if we expect the customer to be able to pay amounts under the arrangement as those amounts become due. If we determine that collection is not probable, we recognize revenue when collection becomes probable (generally upon cash collection). For sales to our large retail customers, we defer revenue recognition until the resale of the products to the end customers, or the sell-through method. Under sell-through revenue accounting, accounts receivable are recognized and inventory is relieved upon shipment to the channel partner or retail customer as title to the inventory is transferred upon shipment, at which point we have a legally enforceable right to collection under normal terms. The associated sales and cost of sales are deferred by recording deferred income product sales (gross profit margin on these sales) as shown on the face of the consolidated balance sheet. When the related product is sold by our primary channel partner or our largest retail customer to their end customers, we recognize previously deferred income as sales and cost of sales. Our large retail customers provide us with sell-through information on a frequent basis regarding sales to end customers and in-channel inventories. For sales to our on-line store customers, revenues are deferred until such time as the right of return privilege granted to the customers lapses, which is thirty (30) days from the date of sale for unopened games. For sales to our Christian bookstore customers and all other customers that cannot provide us with sell-through information and for which we may accept product returns from time to time, revenues are recognized on a cash receipts basis. In the future, we intend to continue using the sell-through methodology from customers that supply us with sell through reports. We also plan to continue recognizing sales on our on-line store after a one month lag to allow for the right that we have given our on-line customers to return unopened games for thirty (30) days. We continue to accumulate historical product return and price concession information related to our Christian bookstore customers and all other customers. In future periods, we may elect to return to the accrual methodology of recording revenue for those customers upon shipment with estimated reserves at which time we believe we can reasonably estimate returns and price concessions to these customers based upon our historical results. Revenue from Sales of Consignment Inventory. We have placed consignment inventory with certain customers. We receive payment from those customers only when they sell our product to the end consumers. We recognize revenue from the sale of consignment inventory only when we receive payment from those customers. Shipping and Handling: In accordance with accounting standards, we recognize amounts billed to customers for shipping and handling as revenue. Additionally, shipping and handling costs incurred by us are included in cost of goods sold. Historically, we promoted our products with advertising, consumer incentive and trade promotions. Such programs include, but are not limited to, cooperative advertising, promotional discounts, coupons, rebates, in-store display incentives, volume based incentives and product introductory payments (i.e. slotting fees). In accordance with accounting standards, certain payments made to customers by us, including promotional sales allowances, cooperative advertising and product introductory expenditures have been deducted from revenue. During the three months ended June 30, 2011, we had no such types of arrangements. Off-Balance Sheet Arrangements We presently do not have any off-balance sheet arrangements. BUSINESS Background Left Behind Games Inc. d/b/a Inspired Media Entertainment (herein referred to as the Company , LFBG , we , us , our or similar terms), was founded on December 31, 2001, and incorporated in the State of Delaware on August 22, 2002, and reincorporated in the State of Nevada on January 17, 2011. The Company is the only publicly-traded exclusive publisher of Christian modern media. It is the world leader in the publication of Christian video games and a Christian social network provider. Trade names include Inspired Media Entertainment , LB Games , Cloud 9 Games and MyPraize. The Company and its subsidiaries produce quality interactive experiences including entertainment products that perpetuate positive values and appeal to faith-based and mainstream audiences. Our common stock is quoted on the OTCQB under the ticker symbol LFBG. Left Behind Games Inc. became a public company on February 7, 2006. On that date, through a reverse merger, we acquired the public entity Bonanza Gold, Inc., a Washington corporation which had been in operation since 1961. As a result of the share exchange agreement, LFBG shareholders and management controlled the new public company. As part of the transaction, we changed the Company s name to Left Behind Games, Inc. and are currently doing business under our various trade names.

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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 you should consider before investing in our common stock. You should carefully read the entire prospectus, including Risk Factors and our financial statements and related notes, before you decide whether to invest in our common stock. Investing in our common stock involves risks. See Risk Factors beginning on page 3. All dollar amounts referred to in this prospectus are in U.S. dollars unless otherwise indicated. Any discrepancies in the tables included herein between the amounts listed and the totals thereof are due to rounding. Unless otherwise indicated or unless the context otherwise requires, all references in this document to we, us, our, the Company and similar expressions are references to Tri-Valley Corporation and, depending on the context, its subsidiaries. Our Company and Business We operate as the parent company for our principal subsidiaries, Tri-Valley Oil & Gas Co., or TVOG, which explores for and produces oil and natural gas in California, and Select Resources Corporation, Inc., or Select Resources, which holds and maintains two major mineral assets in the State of Alaska. Risks Associated with Our Business Our business is subject to numerous risks. Please see the Risk Factors section beginning on page 3 of this prospectus. Corporate Information We were incorporated in Delaware in September 1971 and changed our name to Tri-Valley Corporation in January 1991. Our executive offices are located at 4550 California Avenue, Suite 600, Bakersfield, California 93309, and our telephone number is (661) 864-0500. The URL of our website is www.tri-valleycorp.com. The information on, or that can be accessed through, our website is not incorporated by reference into this prospectus and should not be considered to be a part of this prospectus. THE OFFERING Common stock offered by us None Common stock offered by selling stockholders 10,070,000 shares NYSE Amex Symbol TIV Proceeds to us None

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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that a person should consider before investing in the Company s securities. A potential investor should carefully read the entire Prospectus, including Risk Factors and the Consolidated Financial Statements, before making an investment decision. In this prospectus, MCLN, the Company, we, us and our refers to MedClean Technologies, Inc. Aduromed refers to the Company s former wholly-owned subsidiary which was merged with and into the Company effective January 2, 2009. The Company Background MedClean Technologies, Inc. ( MCLN, MedClean or the Company ) is in the business of providing medical waste treatment solutions. MedClean designs, sells, and installs turnkey regulated medical waste solutions that are flexible enough to be installed as a custom configuration at a customer location, delivered as a self-contained portable solution for specific applications, and can also scale in size to support the needs of independent waste processing facilities serving a wide variety of customer s needs. MedClean also provides services, through its extensive distributor and transport partner program that enables the Company the flexibility to service most, if not all, regulated medical waste streams as well as support HIPAA document destruction. The principal business offices of MedClean are located at 3 Trowbridge Drive, Bethel, Connecticut 06801, and their telephone number at that address is (203) 798-1080. On November 1, 2008, the Company began leasing the remaining 11,834 sq ft of space at its existing facility in Bethel, CT., in order to provide additional space for assembling the MedClean systems (See Description of Properties below). Recent Developments On March 31, 2011, Mr. Scott Grisanti resigned as Chairman of the Company s board of directors. Mr. Grisanti will continue to serve as a director of the Company. Further, on March 31, 2011, Mr. Jay Bendis was appointed as Chairman of the Company s board of directors. A description of the relevant work experience of Messrs. Grisanti and Bendis can be found under Item 10. Directors, Executive Officers, and Corporate Governance and such descriptions are incorporated herein by reference. On April 1, 2011, Mr. Ronald LaMorte retired from his position on the board of directors. His retirement was not the result of any disagreements with the Company on any matters relating to the Company s operations, policies or practices. History Effective January 2, 2009, the Company changed its corporate name from Aduromed Industries, Inc. to MedClean Technologies, Inc. Also, effective January 2, 2009, the Company merged its former wholly-owned subsidiary, Aduromed Corporation ( Aduromed ), with and into the Company. On July 10, 2008, Aduromed entered into a Master Restructuring Agreement ( MRA ) with Pequot Capital Management, Inc. ( Pequot ), on behalf of various funds managed by Pequot (the Pequot Funds ), Sherleigh Associates Inc. Defined Benefit Pension Plan ( Sherleigh ), holders of $1,225,000 in principal amount of the Company s 12% Secured Promissory Notes due July 31, 2008 (the Bridge Loan Holders ), and Mr. Joseph Esposito, corporate and business development advisor to the Company ( Esposito ) regarding their respective investments in the Company (the MRA ). Existing investments in the Company were restructured pursuant to the terms of the MRA and certain other changes were implemented and all transactions were deemed to occur contemporaneously as of August 4, 2008 (the Effective Time ). The major terms of the MRA are as follows: Sherleigh (i) exchanged its shares of Series A and Series B Preferred Stock into 20,000,081 shares of common stock of the Company, par value $0.0001 per share ( Common Stock ), (ii) exchanged accumulated dividends payable on its Series A and Series B Preferred Stock as of June 30, 2008 in the amount of $383,576 into 15,343,040 shares of Common Stock and received additional common stock purchase warrants for 15,343,040 shares of Common Stock at an exercise price of $0.025 per share, and (iii) exchanged liquidated damages in the amount of $215,000 payable to Sherleigh by the Company into 8,600,000 shares of Common Stock and received additional common stock purchase warrants for 8,600,000 shares of Common Stock at an exercise price of $0.025 per share. The Pequot Funds surrendered their shares of Series A and Series B Preferred Stock to the Company, which shares were cancelled, and the Pequot Funds forfeited their right to receive accumulated dividends payable on their Preferred Stock as of June 30, 2008 in the amount of $690,436 and liquidated damages in the amount of $387,000 payable to the Pequot Funds by the Company. The Series A and B Preferred warrants were amended such that they collectively represent the right to purchase 55,999,998 shares of Common Stock at an exercise price of $0.025 per share, of which Pequot Funds hold warrants for the purchase of 36,000,001 shares of Common Stock and Sherleigh holds warrants for the purchase of 19,999,997 shares of Common Stock. Further, the weighted average anti-dilution rights were terminated. Aduromed was formed in 1997, as a Connecticut limited liability company by Mr. Damien R. Tanaka and two investors/members under the name Automated Process LLC. In September, 2002, (i) the two investors/members withdrew as members, (ii) Aduromed was reorganized as a Delaware corporation, changing its name to Aduromed Corporation and (iii) several third parties invested funds in Aduromed to become minority shareholders, warrant holders and creditors. MCLN s Business The principal product of MedClean is providing medical waste treatment solutions. The Company designs, sells, and installs turnkey regulated medical waste solutions that are flexible enough to be installed as a custom configuration at a customer location, delivered as a self-contained portable solution for specific applications, and can also scale in size to support the needs of independent waste processing facilities serving a wide variety of customer s needs. The Company also provides services, through its extensive distributor and transport partner program that enables the Company the flexibility to service most, if not all, regulated medical waste streams as well as support HIPAA document destruction. All MedClean products and services are focused on the conversion of Regulated Medical Waste (RMW) into municipal solid waste (MSW). The disposal of both RMW and MSW is generally regulated on the state and local levels. RMW is solid non-hazardous waste generated in connection with the diagnosis, treatment or immunization of human beings or animals, in research pertaining thereto, or in the production of testing of biologicals, and includes bandages and other materials containing potentially infectious bodily fluids, culture dishes and other glassware, discarded surgical gloves and surgical instruments, sharps (e.g. needles), cultures, stocks, swabs and lancets. The MedClean System is comprised of integrated equipment installed at a generator s medical facility or a processor s treatment facility and is comprised of (i) an autoclave vessel to sterilize the material, (ii) a shredding device to convert the material into unrecognizable confetti-like material, (iii) its Auto-Touch proprietary control panel, (iv) and related services as required. Ancillary equipment includes Quiet Carts with disposable plastic liners used for intramural collection of the RMW at points of generation within the medical facility, the containerization of the waste during the autoclave sterilization process and the mechanical dumping of the waste into the shredding device. The System is automated to minimize personnel contact with the material and to assure regulatory compliance in the conversion process (See Business of the Company - Products below). MedClean s consumable supplies, sold periodically to customers, include the liners for the Quiet Carts , cutting blades for the shredder and supplies such as deodorizers and paper print rolls for use with the autoclaves and control panels. (See Business of the Company - Products below). The Offering Common stock offered by selling security holders 400,000,000 shares of common stock. Common stock outstanding before the offering 1,300,631,369 shares of common stock as of May 2, 2011. Common stock outstanding after the offering 1,700,631,369 shares of common stock. Terms of the Offering The selling security holders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering This offering will terminate thirty six (36) months after the registration statement to which this prospectus is made a part is declared effective by the SEC pursuant to the Equity Credit Agreement. Use of proceeds We will not receive any proceeds from the sale of the shares of common stock offered by the Selling Security Holders. However, we will receive proceeds from sale of our common stock under the Equity Credit Agreement. The proceeds from the offering will be used for working capital and general corporate purposes. See Use of Proceeds.

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+Record date 5:00 p.m., New York City time, on [ ], 2011. Subscription price The subscription price is $[ ] per share, payable in cash. The subscription price represents a premium of [ ]% to the last reported sales price of our common stock on the OTCQB on May 18, 2011, the last trading day prior to the announcement of our intent to commence this subscription rights offering. Basic subscription right The basic subscription right of each subscription right will entitle you to purchase 0.25 shares of our common stock at a subscription price of $[ ] per share. We will not issue fractional shares of common stock in the subscription rights offering, and holders will only be entitled to purchase a whole number of shares of common stock, rounded down to the nearest whole number a holder would otherwise be entitled to purchase. Over-subscription privilege If you elect to exercise your basic subscription right in full, then you may also subscribe for additional shares at the same subscription price per share. If an insufficient number of shares are available to satisfy fully the over-subscription requests, then the available shares will be distributed proportionately among subscription rights holders who exercised their over-subscription privilege based on the number of shares each subscription rights holder subscribed for under his, her or its basic subscription rights. The subscription agent will return any excess subscription price payments by mail without interest or deduction promptly after the expiration of the subscription rights offering. Fractional shares We will not issue fractional shares in the subscription rights offering. Holders of our common stock will only be entitled to purchase a whole number of shares of our common stock, rounded down to the nearest whole share a holder would otherwise be entitled to purchase. Expiration date The subscription rights offering will expire at 5:00 p.m., New York City time, on [ ], 2011, unless we decide, in our sole discretion, to extend the expiration date. No one may exercise subscription rights after the expiration date. Use of proceeds The proceeds from the sale of shares of common stock in this subscription rights offering will be approximately $[ ] million. This amount includes the $[ ] million aggregate proceeds relating to the 2,274,095 shares of our common stock in the subscription rights offering that Contran has agreed to purchase pursuant to its basic subscription rights. Contran has agreed to reimburse us for all reasonable out-of-pocket fees and expenses we incur in connection with the subscription rights offering (except for any such fees and expenses which we and Contran mutually agree are not so reimbursable, such as the $40,000 in fees, along with reasonable out-of-pocket expenses, that we have agreed to pay Value Incorporated in connection with the financial advisory services and opinion it has agreed to render in connection with the subscription rights offering). Accordingly, the proceeds from this subscription rights offering will not be reduced by any material fees or expenses. Assuming the subscription rights offering is completed, we intend to use all of the proceeds of the subscription rights offering to declare and pay a special one-time cash dividend of $[ ] per share to all of the holders of record of our common stock on the record date to be determined by our board of directors shortly after completion of the subscription rights offering. Based on the 15,127,415 shares of common stock that would be outstanding after the completion of the subscription rights offering (including shares to be issued to Contran in the subscription rights offering in reliance on an exemption from the registration requirements of the Securities Act), the aggregate amount of such special one-time cash dividend would be $[ ]. Agreement with Contran Contran beneficially owns 9,096,379 shares of our common stock, which represents approximately 75.2% of the outstanding shares. Contran has agreed to fully exercise its basic subscription right to acquire 2,274,095 shares of common stock pursuant to this subscription rights offering. Contran has further agreed to exercise its over-subscription privilege to the fullest extent possible. Because of this, the subscription rights offering will be fully subscribed, regardless of the extent (if any) to which our other stockholders participate in the subscription rights offering. The subscription rights offering is being made to Contran in reliance on an exemption from the registration requirements of the Securities Act, and shares issued in respect of its participation in the subscription rights offering are not covered by the registration statement of which this prospectus forms a part. All purchases of our common stock to be made by Contran pursuant to the subscription rights offering will be made for investment purposes and not with a view to resale. The number of shares which Contran can actually subscribe for in this subscription rights offering will depend on the actual number of rights exercised by the other holders of our common stock and will be between 2,274,095 and 3,025,483. If no stockholders other than Contran exercise their subscription rights, Contran will acquire all 3,025,483 shares of common stock being offered pursuant to this subscription rights offering for an aggregate purchase price of $[ ], which shares will be issued to Contran in the subscription rights offering in reliance on an exemption from the registration requirements of the Securities Act. In return for such commitment of Contran that ensures the subscription rights offering will be fully subscribed, regardless of the extent (if any) to which our other stockholders participate in the subscription rights offering, and in return for Contran s agreement to reimburse us for all reasonable out-of-pocket fees and expenses we incur in connection with the subscription rights offering (except for any such fees and expenses which we and Contran mutually agree are not so reimbursable, such as the fees and expenses we have agreed to pay Value Incorporated in connection with the financial advisory services and opinion it has agreed to render in connection with the subscription rights offering), we have agreed with Contran that Contran may offset the amount it would be required to pay us upon exercise of its subscription rights (including its over-subscription privilege) by the aggregate amount of the special one-time cash dividend that would otherwise be payable by us to Contran. We have also agreed with Contran that our board of directors will declare the special one-time cash dividend immediately following the completion of the subscription rights offering, and that all amounts to be paid by Contran and all of our other stockholders who may participate in the subscription rights offering (to the extent such other stockholders acquire shares of our common stock in the subscription rights offering) will be retained by the subscription agent (which is also the transfer agent and dividend paying agent for our common stock) until the payment date for the special one-time cash dividend, thereby assuring that our transfer agent will have the funds necessary to pay the special one-time cash dividend to all of our stockholders other than Contran at the time of the completion of the subscription rights offering. See The Subscription Rights Offering Agreement with Contran. Extension, termination and amendment The period for exercising your subscription rights may be extended by us in our sole discretion. We do not anticipate extending the expiration date. We may also terminate or cancel the subscription rights offering in our sole discretion at any time on or before the expiration date of the subscription rights offering for any reason. In the event that the subscription rights offering is terminated or cancelled for any reason, all funds received from subscriptions by stockholders will be returned without interest or deduction. In addition, if we cancel or terminate the subscription rights offering, we would not pay the special one-time cash dividend of $[ ] per share. We also reserve the right to amend or modify the terms of the subscription rights offering (including the maximum number of shares of common stock we may issue in the subscription rights offering or the subscription price per share to be paid to exercise your subscription rights) at any time in our sole discretion. If we amend or modify certain terms of the subscription rights offering, then we will extend the expiration date of the subscription rights offering. Condition to completion It is a condition to the completion of the subscription rights offering that no court or regulatory body prohibit or restrict any of our stockholders from participating in the subscription rights offering on the terms described in this prospectus, and that no action or proceeding be underway or threatened which could so prohibit or restrict any such participation. If these conditions are not satisfied as of the expiration date of the subscription rights offering, then Contran may terminate its obligations under its letter agreement with us dated [ ], 2011 (other than its obligation to reimburse us for our reasonable out-of-pocket fees and expenses we incur in connection with the subscription rights offering, except for any such fees and expenses which we and Contran mutually agree are not so reimbursable, such as the fees and expenses we have agreed to pay Value Incorporated in connection with the financial advisory services and opinion it has agreed to render in connection with the subscription rights offering), and we may extend the expiration date of the subscription rights offering, or we may terminate and cancel the subscription rights offering. Exercising your subscription rights Your subscription rights will be evidenced by a subscription rights certificate that will be distributed to stockholders of record as of the close of business on the record date. You may exercise any number of your subscription rights, or you may choose not to exercise any subscription rights. If you exercise your basic subscription rights in full, you may exercise your over-subscription privilege. Subscription rights not exercised by the expiration date of the offering will be null and void. You will receive all shares of common stock for which you subscribe pursuant to your basic subscription right. If your requested over-subscription is not completely filled, then we will send you a refund check for the subscription price of any shares of common stock we were unable to allocate to you. Revocation You may revoke your exercise of your subscription rights at any time prior to the expiration of the subscription rights offering. Non-transferability of subscription rights You may not sell, give away or otherwise transfer your subscription rights. The subscription rights will not be listed on any securities exchange or national market or quoted on any quotation system. Subscription procedures If you are a record holder that holds shares of our common stock in certificated form or directly in a direct registration account with Computershare Trust Company, N.A., the transfer agent of our common stock, then you may exercise your basic subscription right and, if you elect to do so, your over-subscription privilege, by properly completing and signing the subscription rights certificate which accompanies this prospectus. You must then return the completed and signed subscription rights certificate with full payment for the number of shares of common stock which you are subscribing for, including any shares subscribed for by exercise of your over-subscription privilege, to the subscription agent. Your payment may be made by check or bank draft drawn upon a U.S. bank or postal, or express money order payable to Computershare Trust Company, N.A., as subscription agent. The subscription agent must receive the properly completed and signed subscription rights certificate and payment prior to the expiration date of the subscription rights offering. See The Subscription Rights Offering Subscription Procedures and The Subscription Rights Offering Subscription Payments. You may also exercise your subscription rights by using the guaranteed delivery procedures described in The Subscription Rights Offering Notice of Guaranteed Delivery. If your shares are held in the name of a broker, dealer, bank or other nominee, then you should instruct your broker, dealer, bank or other nominee in accordance with the procedures described in The Subscription Rights Offering Beneficial Owners. No Board recommendation Our board of directors makes no recommendation to you about whether you should exercise any subscription rights. You are urged to make an independent investment decision about whether to exercise your subscription rights based on your own assessment of our business and the subscription rights offering. See Risk Factors beginning on page [ ] for a discussion of some of the risks involved in investing in our common stock. Subscription agent Computershare Trust Company, N.A. Information agent Georgeson Inc. Material United States federal income tax consequences A holder of subscription rights should not recognize income or loss for United States federal income tax purposes in connection with the receipt or exercise of subscription rights in the subscription rights offering. A holder of common stock will recognize income for United States federal income tax purposes in connection with receipt of the $[ ] per share special one-time cash dividend. See Material United States Federal Income Tax Consequences. Questions Questions regarding the subscription rights offering should be directed to the information agent, Georgeson Inc., at 199 Water Street 26th Floor, New York, NY 10038, banks and brokers call (212) 440-9800, all others call toll-free (888) 613-3524. Shares outstanding before the subscription rights offering 12,101,932, as of August 8, 2011. Shares outstanding after completion of the subscription rights offering 15,127,415, assuming the subscription rights offering is fully subscribed (including shares to be issued to Contran in the subscription rights offering in reliance on an exemption from the registration requirements of the Securities Act). Since Contran has agreed to fully exercise its basic subscription rights and to exercise its over-subscription privilege to the fullest extent possible, the subscription rights offering will be fully subscribed even if no stockholders other than Contran exercise subscription rights. Risk factors Stockholders considering exercising their subscription rights should carefully consider the risk factors described in the section of this prospectus entitled Risk Factors, beginning on page [ ]. Issuance of common stock If you purchase shares of common stock through the subscription rights offering, we will deliver certificates representing shares or credit your account at your record holder with shares of our common stock that you purchased pursuant to the subscription rights offering as soon as practicable after the subscription rights offering has expired. Fees and expenses We will bear (and Contran will reimburse us for) the fees and expenses relating to the subscription rights offering (except for any such fees and expenses which we and Contran mutually agree are not so reimbursable, such as the $40,000 in fees, along with reasonable out-of-pocket expenses, that we have agreed to pay Value Incorporated in connection with the financial advisory services and opinion it has agreed to render in connection with the subscription rights offering). No portion of the fee payable to Value Incorporated was contingent upon approval or completion of the subscription rights offering. We have hired First Southwest Company, a registered broker dealer, to assist us on a best efforts basis with respect to the offer and sale of our shares of common stock in the subscription rights offering to holders of record of our common stock who reside in the State of Arizona. Except for the foregoing, the shares of common stock offered pursuant to the subscription rights offering are being offered directly by us without the services of an underwriter or selling agent. You are responsible for paying any other commissions, fees, taxes or other expenses incurred in connection with the exercise of the subscription rights. Shares of our common stock are quoted on the OTCQB under the symbol KYCN. The last reported sales price of our common stock on the OTCQB on August 8, 2011, was $8.50.

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+PROSPECTUS SUMMARY This summary contains basic information about us and the resale of the securities being offered by the selling securityholder. Because it is a summary, it does not contain all of the information that you should consider before investing. You should read this entire prospectus carefully, including the section entitled Risk Factors and our financial statements and the related notes incorporated by reference in this prospectus, before making an investment decision. As used in this prospectus, the terms we, our, ours and us may, depending on the context, refer to Westmoreland Coal Company or to Westmoreland Coal Company s subsidiaries or to Westmoreland Coal Company and its subsidiaries, taken as a whole. Our Business We are an energy company organized as a Delaware corporation in 1910. We mine coal, which is used to produce electric power, and we own power-generating plants. We own five surface mines located in the United States, which supply coal to power plants. Several of these power plants are located adjacent to our mines, and we sell virtually all our coal under multi-year contracts. Due to the generally longer duration and terms of our contracts, we enjoy relatively stable demand compared to competitors who sell more of their production on the spot market and under short-term contracts. We sold 25.2 million tons of coal in 2010. We conduct our mining operations through our wholly-owned subsidiaries Westmoreland Resources, Inc. ( WRI ) and Westmoreland Mining LLC ( WML ). In addition to our mining operations, we own the Roanoke Valley power plants ( ROVA ). ROVA consists of two coal-fired generating units with a total capacity of 230 megawatts. ROVA supplies power pursuant to long-term contracts to one customer. For a more comprehensive overview of our business, we refer you to Item 1 and Item 2 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2010, which are incorporated by reference herein. Corporate Information Our principal executive offices are located at 2 North Cascade Avenue, 2nd Floor, Colorado Springs, CO 80903. Our telephone number is (719) 442-2600. Our website is www.westmoreland.com. The contents of our website are not a part of this prospectus. The Offering Issuer Westmoreland Coal Company Seller The Westmoreland Coal Company Retirement Plan Trust, referred to as the selling securityholder or the Trust. We are not selling any of the securities offered under this prospectus or any prospectus supplement. Securities Offered Up to 425,000 shares of common stock. Use of Proceeds We will not receive any proceeds from the sale by the selling securityholder of the securities offered under this prospectus or any prospectus supplement. See Use of Proceeds. Our Common Stock Our common stock is quoted on NASDAQ Global Market under the symbol WLB.

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+SUMMARY PROSPECTUS The following summary highlights key information contained elsewhere in this prospectus. It does not contain all the information that may be important to you in deciding whether to purchase shares of our common stock. You should read this entire prospectus carefully, especially the discussion of Risk Factors and our financial statements and related notes, before deciding to invest in shares of our common stock. In this prospectus, Integral Vision, the Company, we, us and our refer to Integral Vision, Inc. unless the context requires otherwise. The Company Integral Vision, Inc. develops, manufactures and markets flat panel display inspection systems to ensure product quality in the display manufacturing process. We have over eleven years of experience in the display industry. Our products have been used for inspections of liquid crystal displays (LCD) and flat panel displays like those used in cell phones, electronic organizers, hand-held video games, camcorders, rear projection computer monitors, digital still cameras, HDTV, projectors, video headsets and other products. Using various software tools, our display inspection systems detect cosmetic and functional defects and employ a special interface to provide the results, images and statistics to production personnel. Our production process consists principally of assembling standard electrical, electronic and optical components and hardware subassemblies purchased from suppliers into finished products. We do not rely on a single source for parts and subassemblies. This mitigates our exposure to product interruption due to shortages of parts or limited suppliers. In developing and designing our products we utilize our proprietary intellectual property, which we protect using mechanisms and methods available to us by law. We presently own 14 U.S. patents. However, there can be no assurance that our patents would be considered valid if challenged or would not become obsolete due to technological advancement. The market for machine vision products is characterized by rapid and continuous technological development and product innovation. In an effort to maintain our competitive advantage, we allocate a significant portion of our resources to enhancing existing products and advancing new product development programs. We also seek to maintain close relationships with customers to remain responsive to their needs. The nature of our product offerings may result in significant sales to one or a limited number of customers in any one year. It is possible that the specific customers reaching this threshold may change from year to year. Loss of any one of these customers could have a material impact on our results of operations. Although we generally market our products to end users, we have had success integrating our products with original equipment manufacturers (OEMs) in certain circumstances. Our company faces significant risks. Because of our continuing operating losses and our need for an increased sales level to achieve profitability, our independent auditors included a going concern uncertainty in their audit report on our audited financial statements for the years ended December 31, 2009 and 2008. The going concern uncertainty signifies that substantial doubt exists about our ability to continue in business. Please see the section of this prospectus entitled Risk Factors for more information about the risks faced by us. Our principal executive office is located at 49113 Wixom Tech Drive, Wixom, Michigan 48393, and our telephone number is (248) 668-9230. INTEGRAL VISION, INC. (Exact name of registrant as specified in its charter) Michigan 3823 38-2191935 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code No.) Identification No.) 49113 Wixom Tech Drive, Wixom, Michigan 48393 (248) 668-9230 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Charles J. Drake Chairman Integral Vision, Inc. 49113 Wixom Tech Drive, Wixom, Michigan 48393 (248) 668-9230 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: David S. Song, Esq. Mazzeo Song & Bradham LLP 708 Third Avenue, 19th Floor New York, New York 10017 Telephone: (212) 599-0700 From time to time after the effective date of this Registration Statement. (Approximate date of commencement of proposed sale to the public) 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 1993, 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. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company x CALCULATION OF REGISTRATION FEE Title of Each Class Proposed Maximum Proposed Maximum of Securities to be Amount to Offering Price Per Aggregate Offering Amount of Registered be Registered (1) Unit (2) Price (2) Registration Fee Common Stock (3) 20,812,450 shares $ 0.195 $ 4,058,427.75 $ 226.46 (4) (1) Includes an indeterminable number of additional shares of common stock, pursuant to Rule 416 under the Securities Act, that may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions. (2) The proposed maximum offering price per share was estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act. The calculation is based upon the average of the bid and asked prices per share of $0.195 on December 12, 2008, as quoted on the OTC Bulletin Board. (3) This Registration Statement covers the disposition by certain warrant holders and note holders of up to 20,812,450 shares of common stock issuable upon exercise of their warrants, which have a per share exercise price of $0.001 or $0.25, and issuable upon conversion of their notes, which have a per share conversion price of $0.25. (4) Previously paid. EXPLANATORY NOTE The registrant filed a Form S-3 on December 15, 2008, an Amendment No. 1 to Form S-3 on December 17, 2008 and an Amendment No. 2 to Form S-1 on September 22, 2009. The registrant is filing this Amendment No. 3 on Form S-1 to provide the information required by Form S-1. The Offering Common stock covered hereby 20,812,450 shares. Terms of the offering The selling shareholders may, from time to time, sell, transfer or otherwise dispose of any or all of the shares of common stock covered hereby or interests in such shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. See Plan of Distribution . Use of proceeds We will not receive any proceeds from the disposition of the common stock or interests therein by the selling shareholders. We may, however, receive up to $380,600.50 in connection with the exercise of the warrants which are exercisable for common stock. Any such proceeds we receive will be used for working capital purposes and reduction of our outstanding debt. Please see the section of this prospectus entitled Use of Proceeds for more information. OTC Bulletin Board symbol for our common stock INVI Summary Financial Information You should read the following summary of historical financial data together with the Management s Discussion and Analysis or Plan of Operation and our financial statements and related notes included in our annual report on Form 10-K/A for the year ended December 31, 2009. We have derived the data for each of the fiscal years ended December 31, 2009 and 2008 from our audited financial statements. The historical results are not necessarily indicative of future operating results. We have never paid a dividend and do not anticipate doing so in the foreseeable future. We expect to retain earnings, if any, to finance the expansion and development of our business. The following tables provide selected financial and operating data for the years ended December 31, 2009 and 2008 (dollars in thousands). Statement of Operations Data Year Ended December 31, 2009 2008 Net Revenue $ 1,754 $ 1,027 Gross Margin 883 437 Operating Loss (1,926 ) (2,981 ) Net Loss (2,761 ) (10,733 ) 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. Balance Sheet Data Dec. 31, Dec. 31, 2009 2008 Current Assets $ 366 $ 808 Total Assets 617 1,037 Current Liabilities Notes payable-current 7,377 1,786 Other current liabilities 1,616 1,008 Deferred revenue for product sales 72 656 Total current liabilities 9,065 3,450 Long Term Debt 0 3,671 Total liabilities 9,065 7,121 Stockholders Deficit Preferred stock, 400,000 shares authorized; none issued 0 0 Common stock, without par value, stated value $.20 per share; 90,000,000 shares authorized; 30,866,409 shares issued and outstanding (29,566,409 in 2008) 6,173 5,913 Additional paid-in capital 47,528 47,391 Accumulated deficit (62,149 ) (59,388 ) Total stockholders deficit (8,448 ) (6,084 ) RISK FACTORS An investment in our common stock involves a high degree of risk. Before investing in our common stock, you should carefully consider the risks described below, as well as other information contained in this prospectus. The risks described below are not the only ones facing our company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business operations. If any of the adverse events described in this Risk Factors section actually occur, our business, results of operations and financial condition could be materially adversely affected, the market price of our common stock could decline and you could lose all or part of your investment in our common stock. This section includes or refers to forward-looking statements. You should refer to the explanation of the qualifications and limitations on forward-looking statements discussed in Cautionary Statement About Forward-Looking Information. Subject to completion, dated January 12, 2011 INTEGRAL VISION, INC. 20,812,450 Shares of Common Stock This prospectus covers 20,812,450 shares of the common stock of Integral Vision, Inc., which may be disposed of by the selling shareholders identified in this prospectus. We will receive no part of the proceeds from dispositions of the shares covered by this prospectus. This prospectus relates to shares of our common stock underlying outstanding warrants and convertible notes and there can be no assurance that any of the outstanding warrants or convertible notes will be exercised or converted. If all of the outstanding warrants are exercised for cash, we may receive proceeds of up to approximately $380,600.50. This prospectus also covers, to the extent permitted by Rule 416 under the Securities Act, such indeterminate number of additional shares of common stock as may become issuable upon the exercise and conversion of such warrants and notes in order to prevent dilution resulting from stock splits, stock dividends or similar events. We have agreed to pay the expenses incurred in connection with the registration of the shares covered hereby, but all selling and other expenses incurred by the selling shareholders will be borne by the selling shareholders. Please see the section of this prospectus entitled Use of Proceeds for more information. The shares of common stock covered by this prospectus are restricted securities under the Securities Act of 1933, as amended (the Securities Act ), before their sale under this prospectus. This prospectus has been prepared for the purpose of registering these shares of common stock under the Securities Act to allow for a sale or other disposition by the selling shareholders to the public without restriction. The selling shareholders and any participating brokers or dealers may be deemed to be underwriters within the meaning of the Securities Act, in which event any profit on the disposition of shares by the selling shareholders, and any commissions or discounts received by the brokers or dealers, may be deemed to be underwriting compensation under the Securities Act. Our common stock is quoted on the OTC Bulletin Board of the National Association of Securities Dealers under the trading symbol INVI . The last reported sale price of our common stock on the OTC Bulletin Board on January 11, 2011 was $0.03 per share. The information in this 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 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. Investing in our common stock involves a high degree of risk. Please carefully consider the Risk Factors beginning on page 3 of this prospectus before investing in our common stock. 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. We have a history of operating losses. We may incur future losses. This condition has caused our independent auditors to express substantial doubt about our ability to continue as a going concern. We have experienced net operating losses and incurred negative cash flows from operations since 1997. As of December 31, 2009, we had a stockholders deficit of $8,448,000. During the years ended December 31, 2009 and 2008, the Company incurred losses from continuing operations of approximately $1.9 million and $3.0 million, respectively. This condition has caused our independent auditors to express substantial doubt about our ability to continue as a going concern in their report on our December 31, 2009 financial statements. Currently, our ability to continue as a going concern is dependent on securing sufficient sales orders to allow us to achieve profitable operations. Although management believes that revenues from operations as well as financing strategies will be adequate to permit the Company to meet its obligations, there can be no assurance that such revenues or strategies will be accomplished or that we will be able to continue as a going concern in the normal course of business. The Company s present cash position requires it to secure funding for the immediate future as well as funding to provide working capital for anticipated orders. Unless we are able to obtain additional funding, we may not be able to pay our debts when they become due. For the last several years, we have financed our operations through the sale of our securities and by borrowing money. Our present cash position and current sales level require that we seek additional financing to continue operations. There can be no assurance that we will be able to find additional financing sufficient to meet our capital needs. Any additional financing found could involve significant dilution to existing shareholders depending on the terms. The Company is in default under the terms of the Fifth Amended and Restated Note and Warrant Purchase Agreement. We are in default of the Fifth Amended and Restated Note and Warrant Purchase Agreement because we have failed to make full payment of principal and interest on certain Class 2 and Class 3 Notes on their respective maturity dates. The Class 2 and Class 3 Notes are secured by the Company's intellectual property pursuant to a Collateral Assignment of Proprietary Rights and Security Agreement (the Collateral Assignment ), and the Class 2 Notes are also secured by the Company's accounts receivable and inventory pursuant to a Security Agreement (the Security Agreement ). The Class 2 and Class 3 Notes have begun to accrue interest at their default interest rates, which is equal to their respective interest rates plus an additional four percent. Pursuant to the Collateral Assignment and the Security Agreement, the Class 2 and Class 3 Note holders (or the collateral agent acting on their behalf) have the right to foreclose on the collateral covered by such agreements, and exercise any of several remedies provided in such agreements, including taking possession of such collateral and selling such collateral. The Company is in discussions with the note holders about curing or waiving the default. The note holders have continued to purchase new notes to provide additional funding to the Company after the default. Unless we are able to generate greater revenues, our ability to pay our debt when they become due may be compromised. Our ability to generate profits depends upon our future financial and operating performance, which in turn, is subject to prevailing economic conditions and financial, business, competitive, legislative and regulatory factors. Many of these factors are beyond our control. If we do not obtain orders and ship our products at the rate we presently anticipate, our cash flow and capital resources may become insufficient to fund our operations until we begin to receive sufficient orders. We may be forced to diminish capital expenditures, sell assets or obtain additional financing through equity capital or debt. We are currently in the process of establishing a branch office in Taiwan to enhance our ability to serve our current and prospective Asian customers. Certain of our customers have asked us to establish a physical presence in Taiwan to assure that we can be responsive to their needs. This will require employing local personnel to help maintain and service our equipment. There can be no assurance that we will be able to successfully hire, train, and retain qualified personnel in Taiwan or that we will have the resources to financially support the branch office once established. Failure to successfully establish the branch office could have a negative impact on the willingness of our Taiwanese customers to continue to place orders for our equipment. We are dependant on sales growth to achieve profitability. Sales of our machine vision products are expected to grow when new technologies are adopted in mass production. Our sales should also grow when automated inspection of display products becomes more accepted. Our sales in the last few years have involved small quantities of inspection systems sold to several companies that are developing new display technologies. Our growth is dependent upon the rate of commercialization and mass production of the following display technologies: E-Paper; Micro ElectroMechanical Systems (MEMS); and Organic Light Emitting Diode (OLED). However, adoption of new technologies may not occur in the near future. Further delays in the full production of these new display technologies, or the abandonment of these technologies, would have significant negative consequences to our survival and future growth. If a viable market fails to develop or develops more slowly than we anticipate, we may be unable to recover the losses we will have incurred to develop our products. We may also be unable to achieve profitability. In addition, we have begun to sell products for the automated inspection of Liquid Crystal Displays (LCD)-. When automatic inspection of LCD displays becomes more widespread, we expect our products to become more attractive and the demand for our products to increase. However, automation of LCD inspection has grown slower than previously anticipated, and such growth could continue to be delayed. Our financial condition may limit our ability to secure and fulfill new sales orders. Because of our financial position, certain customers and potential customers have expressed concerns regarding our stability and our resulting ability to fill any potential large orders. We are currently working with a number of large customers who are evaluating our products for use in their manufacture of products using new microdisplay technologies. We expect that additional sales orders will be placed by these customers within the next six months, but there is no assurance that we will be successful in securing sales orders from these or other potential customers or that we will be able to fill any orders which are placed. Our future will depend on our ability to develop and successfully introduce new products and product enhancements. The markets in which we compete are characterized by rapid technological change. If we do not update and enhance our technologies, they will become obsolete. Our continued success will depend in large part upon our ability to develop and successfully introduce new products and product enhancements. We have devoted, and will continue to devote, substantial resources to product development. We cannot guarantee that we will be able to successfully develop, introduce or market new products or enhancements. We are also not certain that our new products or enhancements will meet the requirements of the marketplace or achieve market acceptance. If we are unable to develop and introduce new products or enhancements in a timely manner in response to changing market conditions or customer requirements, the success of our business will be materially and adversely affected. In addition, technological developments have resulted and may continue to result in the obsolescence of components and subassemblies which we hold as inventory. We may experience difficulties with third parties who supply electrical, electronic and optical components and hardware subassemblies for the compilation of our products. We rely on third party vendors to supply key components and subassemblies for our products. If those suppliers fail to develop and supply these components in a timely manner or at all, or fail to develop or supply components that meet our quality, quantity or cost requirements, we may become unable to obtain the necessary parts and subassemblies. If such an event occurs, and if we are unable to obtain substitute sources of these components on a timely basis or on terms acceptable to us, we may not be able to assemble our products on schedule or at all. In addition, to the extent that our supply partners use technology or manufacturing processes that are proprietary, we may be unable to obtain comparable components from alternative sources. We may also need to scale back implementation of our business development plans in the absence of needed vendors, which would adversely affect our future prospects. While we have entered into relationships with suppliers of some key components for our products, we do not know when or whether we will secure supply relationships for all required components and subassemblies for our products, or whether such relationships will be on terms that will allow us to achieve our objectives. Our business, prospects, results of operations and financial condition could be harmed if we fail to secure relationships with entities which can supply the required components for our products or if such suppliers suffer shortages of parts. Failure of our products to pass testing could negatively impact demand for our products. We may encounter problems and delays during testing of our products for a number of reasons, including: failure of our technology; failure of technology of third parties; and our failure to design, maintain and service our products properly. Many of these potential problems and delays are beyond our control. Any problem or perceived problem with our product tests could materially harm our reputation and impair market acceptance of, and demand for, our products. We face competition from manual inspection and from other companies and may be unable to compete successfully. The markets in which we intend to compete are new and require technological advancement. However, we anticipate that the rate of mass production and automation of inspection of micro-display products will grow and the markets will attract more competition. Presently, most final inspection of small flat panel displays is manual. Higher resolution, increased brightness, and increased contrast in newer versions of the diplays are stretching human capabilities. While automated inspection addresses these problems and offers a good return on investment, there can be no assurance that it will be accepted by our customers in place of the manual inspection they are already familiar with. For optical inspection, our primary competitor is Westar Display Technologies, Inc. We believe that the principal competitive factors for optical inspection are quality, price, cycle times and features. While we believe we currently compete favorably with respect to the above factors, we cannot guarantee that we will be able to continue to do so or that competition will not have a material adverse effect on our results of operations and financial condition. While we may face competition from additional sources in all aspects of our business, we believe that competition in the optical inspection of small flat panel displays, in particular, may intensify and that companies with substantially greater financial, technical, research and development, manufacturing and marketing resources than us may enter our markets. We may be unable to secure or enforce patent rights, trademarks, trade secrets or other intellectual property. As a result, we could lose our competitive advantage. We believe that we currently have a competitive advantage based on the technological superiority of our products. We may not be successful in securing or maintaining proprietary patent protection for our products or technologies that we develop or license. In addition, our competitors may develop products similar to ours using methods and technologies that are beyond the scope of our intellectual property protection, which could reduce our anticipated sales. While some of our products have proprietary patent protection, a challenge to these patents may result in litigation. Prosecuting or defending patent infringement suits or otherwise protecting our intellectual property rights can be protracted, expensive and may distract management and other personnel from performing their duties for us. However, failure to do so may diminish our ability to compete effectively and may harm our operating results. In order to develop and protect our competitive position, we rely upon: patents; trade secrets; procedures related to confidentiality; contractual provisions; unpatented proprietary know-how; and continuing technological innovation. Confidentiality agreements to which we are party may be breached, and we may not have adequate remedies for any breach. We cannot assure you that others will not independently develop substantially equivalent proprietary technology and techniques or otherwise gain access to our trade secrets and technology. Our inability to maintain the proprietary nature of our technology and processes could allow our competitors to limit or eliminate any competitive advantages we may have. If we are unable to secure or enforce patent rights, trademarks, trade secrets or other intellectual property, the success of our business could be materially adversely affected. In addition, there is no guarantee that foreign intellectual property laws will protect our patents and other intellectual property rights to the same extent as the laws of the United States. Third parties may also claim infringement by us with respect to past, current or future technologies. We expect that participants in our markets will be increasingly involved in infringement claims as litigation concerning patents, other forms of intellectual property and proprietary technology is becoming more widespread. Any claim, whether meritorious or not, could be time consuming and result in costly litigation, operational delays and distraction of management. If we are found to have infringed on the intellectual property of others, our products could be removed from the market, or we could suffer a substantial delay in, or prevention of, the introduction of new products to the market. Any of these factors could have a material adverse effect on our business. Our business depends on retaining and attracting highly capable management and operating personnel. Our continued success depends in large part on certain key management and technical personnel, the loss of one or more of whom could adversely affect our future. In particular, we rely upon the services and expertise of: our CEO, Charles J. Drake; our President, Mark R. Doede; our Chief Technical Officer, Andrew Blowers; and our product development and engineering staff. If any of them were to become unavailable to work for us, our financial condition, operating results and future prospects for success would be adversely affected. Our growth strategy will require the following: expanded customer services and support; increased personnel throughout the Company; expanded operational and financial systems; and implementation of additional control procedures. To retain and attract key personnel, we use various measures, including employment agreements, a stock incentive plan and incentive bonuses for key employees. We believe that our future success will depend significantly upon our ability to attract, retain and motivate skilled technical, sales and management employees. However, we cannot guarantee that we will be able to attract and retain qualified personnel. We may be unable to manage rapid growth effectively. When automated inspection of display products becomes more widespread, as is anticipated, we expect to expand our production capabilities, accelerate the marketing of our products and enter a period of rapid growth. This will place a significant strain on our senior management team and our financial and other resources. The proposed expansion will expose us to increased competition, greater overhead, marketing and support costs and other risks associated with the development and production of technologically advanced new products. Our ability to manage our rapid growth effectively will require us to do the following: continue to improve our operations; improve our financial and management information systems; and train, motivate and manage our employees. Difficulties in effectively managing the budgeting, forecasting and other process control issues presented by such a rapid expansion could harm our business, prospects, results of operations and financial condition. All of our operations are consolidated in a single location and we are susceptible to business interruption in the event of damage to or disruptions in our facility. Our headquarters and all of our employees are located in the same building in Wixom, Michigan. We have no present plans to establish any offices in addition to our headquarters. Because our operations are consolidated in one location, we are more susceptible to power and equipment failures and business interruptions in the event of fires, floods and other natural disasters than if we had multiple office locations. We cannot assure you that we are adequately insured to cover the amount of any losses relating to any of these potential events, business interruptions resulting from damage to or destruction of our headquarters or other events affecting us that do not occur on our premises. Our principal shareholders have substantial control over our affairs. Our directors and executive officers, together with our other principal shareholders, own or control approximately 54%of our outstanding common stock as of the date of this prospectus. These shareholders are able to exert substantial influence over all matters submitted to a vote of the shareholders, including the election and removal of directors, amendments to our articles of incorporation and by-laws, and the approval of a merger, consolidation or sale of all or substantially all of our assets. In addition, this concentration of ownership could inhibit the management of our business and affairs and have the effect of delaying, deferring or preventing a change in control or impeding a merger, consolidation, takeover or other business combination which you, as a shareholder, may view favorably. Product liability or defects could negatively impact our operations and demand for our products. Any liability we incur for damages resulting from malfunctions or design defects of our products could be substantial and could materially adversely affect our business, financial condition, results of operations and prospects. In addition, a publicized actual or perceived problem could adversely affect the market s perception of our products resulting in a decline in demand for our products. Such an event could divert the attention of our management, which may materially and adversely affect our business, financial condition, results of operations and prospects. Our common stock price has been and could remain volatile because of several factors, including a limited public float. The market price of our common stock has historically experienced and may continue to experience significant volatility. During the year ended December 31, 2010, the sale price of our common stock fluctuated from $0.02 to $0.13 per share. We believe that our common stock is subject to wide price fluctuations because of several factors, including the following: absence of meaningful earnings; relatively thin trading market for our common stock, which causes trades of small blocks of stock to have a significant impact on our stock price; announcements by us or our competitors of new products, significant contracts, acquisitions or strategic relationships; general volatility in recent years of the stock markets, especially the markets for technology-related stocks; and investor sentiment regarding equity markets generally, including public perception of corporate ethics and governance and the accuracy and transparency of financial reporting. This volatility has affected the market prices of securities issued by many companies for reasons unrelated to their operating performance and may adversely affect the price of our common stock. If our shareholders sell a large number of shares of common stock or if we issue a large number of shares in connection with future acquisitions or financings, the market price of our common stock could decline significantly. Further, the perception in the public market that our shareholders might sell a large number of shares of common stock could cause a decline in the market price of our common stock. In addition, we may become subject to securities class action litigation as a result of volatility in the price of our common stock, which could result in substantial costs and diversion of management s attention and resources and could harm our stock price, business, prospects, results of operations and financial condition. The terms of our agreements related to issued common stock, notes and warrants may restrict our operations and future financing arrangements. Certain of our debt and equity securities contain restrictive covenants that impose certain limitations on our activities, including, among other things, the manner in which we effectufate financings, the amount of equity we grant to our employees, our ability to engage in major transactions such as mergers and asset sales. These covenants may limit our ability to respond to changing business and economic conditions and needs. As a result, we may be hindered from engaging in transactions that might be considered important to our business strategy or otherwise beneficial to us. In the event that we obtain additional capital, existing shareholders could face significant dilution from our financing efforts depending on the terms. For the last several years, we have financed our operations through the sale of our securities and by borrowing money. These transactions have resulted in the dilution of ownership interests held by existing shareholders. We expect to raise additional capital through public or private financing. We could issue debt securities, capital stock or a combination of these securities. If we raise additional funds through the sale of equity or convertible debt securities, your ownership percentage of our common stock will be reduced, and the reduction could be significant. In addition, these transactions may dilute the value of our common stock. We may also have to issue securities that have rights, preferences and privileges superior to our common stock. We could be subject to legal action by the investors and by state and federal securities regulators if we have failed to comply with all applicable laws in connection with our private placement transactions. We have offered and sold securities in private placements in reliance upon exemptions from the registration requirements of the Commission and state agencies. These exemptions are highly technical in nature and if we inadvertently failed to comply with the requirements of any of the exemptive provisions, investors might have the right to rescind their purchase of our securities or sue for damages. If one or more investors were to successfully seek rescission or prevail in any suit, we could face severe financial demands that could materially and adversely affect our financial position. Further, the Commission and state agencies could take action against us that could, among other things, divert management s attention from the operation of our business, cause us to pay fines and penalties and cause us to have to repay investors their original investment. CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING INFORMATION Some of the information contained in this prospectus and the documents incorporated by reference into this prospectus may contain forward-looking statements , as defined in Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act ), and the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to events or transactions that have not yet occurred, our expectations or estimates for our future operations, objectives, growth strategies, business plans or other facts that have not yet occurred. These statements can be identified by the use of forward-looking terminology such as might, may, will, could, expect, anticipate, estimate, likely, believe, or continue or the negative of those words, or other variations or comparable terminology. You should understand that these forward-looking statements are necessarily estimates reflecting our judgment, not guarantees of future performance. They are subject to a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. The

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+S-1/A 1 a2203993zs-1a.htm S-1/A Table of Contents As filed with the Securities and Exchange Commission on June 24, 2011 Registration No. 333-173042 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 TABLE OF CONTENTS Market and Industry Information ii Special Note Regarding Forward-Looking Statements ii Summary 1

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+SUMMARY -------------------------------------------------------------------------------- MetLife Target Maturity is a single Purchase Payment modified guaranteed annuity. Modified guaranteed annuities offer a guaranteed fixed rate of return on Your principal investment if You do not surrender Your Contract before the Guarantee Period ends. If You do surrender Your Contract before the end of the Guarantee Period, generally Your Cash Value is subject to a Market Value Adjustment and surrender charge. The Contract is offered by MetLife Insurance Company of Connecticut (the "Company", "We" or "Us"). MetLife Insurance Company of Connecticut is a wholly- owned subsidiary of MetLife, Inc. The Contract is available only in those states where it has been approved for sale. You may select an initial Guarantee Period from those available from the Company. Currently, We offer Guarantee Periods up to ten years. Interest on the Purchase Payment is credited on a daily basis and so compounded in the Guaranteed Interest Rate. (See "Guarantee Periods" and "Establishment of Guaranteed Interest Rates.") At the end of each Guarantee Period, a subsequent Guarantee Period of one year will automatically begin unless You elect another duration within thirty days before the Guarantee Period ends. You may surrender Your Contract, but the Cash Value may be subject to a surrender charge and/or a Market Value Adjustment. A full or partial surrender made prior to the end of a Guarantee Period will be subject to a Market Value Adjustment. The surrender charge may be deducted from any surrender made before the end of the seventh Contract Year. The surrender charge is computed as a percentage of the Cash Value being surrendered. <Table> <Caption> CONTRACT YEAR CHARGE AS A IN WHICH SURRENDER PERCENTAGE OF IS MADE CASH VALUE ------------------ ------------- <S> <C> 1 7% 2 6% 3 5% 4 4% 5 3% 6 2% 7 1% Thereafter 0% </Table> There is no surrender charge for full or partial surrenders: (1) at the end of an initial Guarantee Period of at least three years, or (2) at the end of any other Initial Guarantee Period if the surrender occurs on or after the fifth Contract Year. We may waive surrender charges in certain instances. (See "Surrenders -- Waiver of Surrender Charge".) There is no Market Value Adjustment if You surrender at the end of a Guarantee Period. Any such surrender request must be in writing and received by Us within 30 days before the Guarantee Period ends. You may request any interest that has been credited during the prior Contract Year. No surrender charge or Market Value Adjustment will be imposed on such interest payments; however, all applicable Premium Taxes will be deducted. Any such surrender may also be subject to federal and state taxes. (See "Surrenders and Federal Tax Considerations.") The Market Value Adjustment reflects the relationship between the current Guaranteed Interest Rate for the time left in the Guarantee Period at surrender and the Guaranteed Interest Rate that applies to Your Contract. The Market Value Adjustment amount primarily depends on the interest rates the Company receives on its investments when the current Guaranteed Interest Rates are established. The Market Value Adjustment is sensitive, therefore, to changes in interest rates. It is possible that the amount You receive upon surrender may be less than Your original Purchase Payment if interest rates increase. It is also possible that if interest rates decrease, the amount You receive upon surrender may be more than Your original Purchase Payment plus accrued interest. On the Annuity Commencement Date specified by You, the Company will make either a lump sum payment or start to pay a series of payments based on the annuity options You select. (See "Annuity Period".) The Contract may provide for a death benefit that is the Account Value on the date We receive written notification of death. If the Annuitant dies before the Annuity Commencement Date with no designated Contingent Annuitant surviving, or if the Owner dies before the Annuity Commencement Date with the Annuitant surviving, We will pay

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+detail later in this prospectus. This summary provides an overview of selected information and does not contain all of the information you should consider. Therefore, you should also read the more detailed information contained in this prospectus, including our financial statements and the notes thereto and matters

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+S-1/A 1 a2203993zs-1a.htm S-1/A Table of Contents As filed with the Securities and Exchange Commission on June 24, 2011 Registration No. 333-173042 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 TABLE OF CONTENTS Market and Industry Information ii Special Note Regarding Forward-Looking Statements ii Summary 1

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+PROSPECTUS SUMMARY The items in the following summary are described in more detail later in this prospectus. You should read the following summary together with the more detailed information regarding our company and the common stock being sold in this offering, including Risk Factors and our consolidated financial statements and related notes, included elsewhere in, or incorporated by reference into, this prospectus. Conventions Used in this Prospectus In this prospectus, unless indicated otherwise, BVI refers to the British Virgin Islands; China, Chinese and PRC, refer to the People s Republic of China and for the purpose of this prospectus, do not include Taiwan and the special administrative regions of Hong Kong and Macau; Exchange Act refers to the Securities Exchange Act of 1934, as amended; Fuping Milkgoat refers to Fuping Milkgoat Dairy Co., Ltd., a company organized under the laws of the PRC; Milkgoat China refers to Milkgoat (China) Goat Dairy Co., Ltd., a company organized under the laws of the PRC; Milkgoat Industrial refers to Milkgoat Industrial Co., Ltd, a limited liability company organized under the laws of BVI; Renminbi and RMB refer to the legal currency of China; SEC refers to the United States Securities and Exchange Commission; Securities Act refers to the Securities Act of 1933, as amended; U.S. dollars, dollars and $ refer to the legal currency of the United States; we, us, our company, our and Yayi refer to the combined business of Yayi International Inc. and/or its consolidated subsidiaries, as the case may be; and Weinan Milkgoat refers to Weinan Milkgoat Production Co., Ltd., a company organized under the laws of the PRC. Registration No. 333 -170172 As filed with the Securities and Exchange Commission on July 14, 2011 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 5 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 YAYI INTERNATIONAL INC. (Exact name of registrant as specified in its charter) Delaware 2020 87-0046720 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.) No. 9 Xingguang Road, Northern Industrial Park of Zhongbei Town, Xiqing District, Tianjin 300384, China (86)22-2798-4033 (Address and telephone number of principal executive offices) ____________________________ Copies of Correspondence to: CT, a Wolters Kluwer business Louis A. Bevilacqua, Esq. 111 Eighth Avenue, 13th Floor Pillsbury Winthrop Shaw Pittman LLP New York, New York 10011 2300 N Street, NW Tel: (212) 894-8940 Washington, DC 20037 (202) 663-8000 (Names, addresses and telephone numbers of agents for service) Approximate date of commencement of proposed sale to public: From time to time after the effective date of this Registration Statement, as determined by market conditions and other factors. 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, 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 the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] 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 [X] (Do not check if a smaller reporting company) The Company Overview of Our Business According to the China Quality Net, maintained by China Quality Inspection Association, we are the first and one of the leading producers and distributors of premium goat milk formula products for infants, toddlers, young children, and adults in China. We began selling powder products in Tianjin and Beijing in 2001, in Southern China in 2004 and Northern China in 2006. We currently manufacture and distribute goat milk powder products. In strict compliance with various national standards, we developed our goat milk powder products with multiple formulations designed to meet nutritional requirements and help promote an infant or toddler s healthy growth at each developmental stage. Through several years of laboratory tests, we developed the goat odor elimination technology based on know-how licensed from a third party, which substantially eliminates the goat odor from our goat milk powder products without adding any artificial flavors. Most of our goat milk products are formulated through the inclusion of supplements such as vitamins, calcium, iron, selenium, chromium and omega-3 fatty acids, as needed to address the nutritional or health needs of the consumers. To ensure the product quality and safety, we import all of these supplements from other countries, such as Malaysia, the United States and Ireland. Our current formula product lines are targeted at the premium segment of the dairy market and health-conscious consumers. Headquartered in Tianjin, China, we sell and distribute our products through a nationwide network of retail points across China in 23 provinces and municipalities including infant-maternity chain stores, supermarkets (including multinational chains) and drug stores, as well as catalogue sales and a dedicated online store at Taobao.com. We are vertically integrated and source raw goat milk from our proprietary dairy farms as well as neighboring goat dairy farmers on a long-term contract basis in milk collection centers, which helps us maintain quality control. Since the end of 2009, we have been working with Trout & Partners to streamline our product portfolio and refine our brand image in order to position and strengthen our "Milk Goat" brand as the premium goat milk brand throughout China. We have restructured our original product portfolio of dozens of products and specifications and refined our marketing strategy. Our new product portfolio consists of three segments, infant formula products, adult products and children products with an aggregate 26 formula products under the "Milk Goat" brand with three package sizes of 600, 665 and 365 grams. Most of our goat milk products are formulated through the inclusion of supplements such as vitamins, calcium, iron, selenium, chromium and omega-3 fatty acids, as needed to address the nutritional or health needs of the consumers. We sell and distribute our products through a network of approximately 3,800 retail points including infant-maternity chain stores, domestic and multinational supermarkets and drug stores, as well as catalogue sales across China. We sell most of our products to more than 200 distributors, who in turn sell our products to the retail points. The distributors are located in 23 provinces in China. In addition, since the end of December 2010, we have been selling our products with 365-gram, 600-gram and 665-gram package sizes to the infant-maternity retail stores. We expect such new sales strategy to help further strengthen our market presence in this distribution channel. Our Competitive Strengths We believe that our success to date and potential for future growth can be attributed to a combination of our strengths, including the following: First Mover Advantage. Various researches and publications indicate that goat milk is emerging as an ideal substitute to cow milk as consumers are increasingly aware of its benefits particularly for infants, who prefer a dairy product with a nutritional and molecular composition closer to human milk. Goat milk differs from cow milk in a number of ways and some of its attributes make it closer to human milk, such as high level of bioactive components, similar casein composition and secretion process in both human milk and goat milk. We are the first Chinese company to produce, sell and distribute goat milk formula products throughout China and we have been doing so since 2001. Dedication to Quality Control. We source raw milk from our proprietary dairy farms and other goat dairy farmers on a long-term contractual basis in Shaanxi Province in northwestern China, where dairy goats are abundant and of optimal breed for milk production. Vertically integrated production and the ability to control raw goat milk sources enable us to secure raw material supply, and thus maintain our leading position in the market. High-end Products. Our current formula product lines are targeted at the premium segment of the dairy market and health-conscious consumers. Given goat milk s nutritional and molecular composition closer to human milk as well as the relative scarcity of goat milk since dairy goats have limited production capacity when compared to dairy cows, our goat milk products are positioned at the higher end of the dairy cost spectrum. Experienced Management. Our senior management team has extensive operating experience and industry knowledge. For instance, Ms. Li Liu, who is our founder, Chairwoman, CEO and President, started the Company s goat milk business in 2001. She is a pioneer in the goat milk industry. Mr. Fung Shek, who has served as our Director, Vice President and Deputy General Manager, also has significant experience in the goat milk business. He was formerly Director of Sales for P&G Taiwan, a company that provides consumer products in various areas. CALCULATION OF REGISTRATION FEE Title of securities to be registered Amount to be registered(1) Proposed maximum offering price per share Proposed maximum aggregate offering price Amount of registration fee Common stock, par value $0.001 per share, underlying convertible notes held by certain selling stockholders (1) 4,460,000 (2) $1.48 (3) $6,600,800 (3) $471 Common stock, par value $0.001 per share, underlying warrants held by certain selling stockholders (1) 1,115,000 (4) $2.50 (5) $2,787,500 (5) $199 Total 5,575,000 $9,388,300 $670(6) (1) In accordance with Rule 416(a), the Registrant is also registering hereunder an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions. (2) Represents shares of common stock issuable upon the conversion of the principal amount of the Registrant s 9% convertible notes held by certain selling stockholders named in this registration statement. (3) Estimated pursuant to Rule 457(c) of the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee based on the average of high and low prices reported on the Over-the-Counter Bulletin Board on October 25, 2010. (4) Represents shares of common stock issuable upon exercise of Series F common stock purchase warrants to purchase shares of common stock held by certain selling stockholders named in this registration statement. (5) Calculated in accordance with Rule 457(g) based upon the exercise price of the Series F common stock purchase warrants held by certain selling stockholders named in this registration statement. (6) 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 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 such Section 8(a), may determine. Our Growth Strategy As a leading goat milk producer and distributor in China, we believe we are well positioned to capitalize on future industry growth in China. We are dedicated to providing healthy and high quality products to our consumers. We will implement the following strategic plans to take advantage of industry opportunities and our competitive strengths: Focus on brand development. In order to manifest our position as China s leader in goat milk products and to educate consumers about the benefits of goat milk, we plan to invest in strengthening our brand equity. In November 2009, we engaged US-based branding and strategic positioning agency, Trout & Partners to enhance our brand position and build Milk Goat into a household brand in China. We have increased our advertising expenses and plan to continue advertising on China Central Television, or CCTV, in order to market our products as premium goat milk powder products. Increase production capacity. We are in the process of increasing our production capacity for goat milk products by more than 400%. We broke ground on a new spray drying processing facility in Shaanxi Province in November 2009, which is expected to commence production by the fourth calendar quarter of 2013 and become the largest raw goat milk processing base in China with an expected production capacity of approximately 4,600 metric tons per annum. We have also invested in a new packing facility and warehouse in Tianjin, which is expected to go into operation in the fourth calendar quarter of 2012. Expand distribution network. We sell and distribute our products through a network of approximately 3,800 retail points including infant-maternity chain stores, supermarkets (including multinational chains) and drug stores, as well as catalogue sales across China. Since 2010, we have expanded aggressively into the supermarkets segment as well as online sales through our online store at Taobao.com. Focus on quality control. We continue to improve our product inspection procedures and monitor our raw milk suppliers in order to ensure the high quality of our products. We believe we can maintain our production of high quality dairy products by continuing to enter exclusive contracts with dairy farmers who can deliver quality goat milk, strengthening our company-owned large-scale dairy farm operations, expanding our company-owned collection stations and production facilities, and employing comprehensive testing and quality control measures. Our Background and History We were originally incorporated in Delaware in 1986 under the name of Commercial Ventures Ltd. We changed our name to FIN U.S.A., Inc. in 1987, and in 1993 to I/NET, INC, when we developed and marketed computer software for mid range computers. In 2006, Tryant acquired a majority of our outstanding capital stock. In connection with that acquisition, we ceased our operations and became a shell company in search of an operating business to acquire. On April 15, 2007, our name was changed to Ardmore Holding Corporation and in September 2008, following the Merger with Milkgoat Industrial as described below, we ceased being a shell company and began active goat milk and related products production and sale operations. On September 12, 2008, we filed an amended and restated certificate of incorporation with the Secretary of State of the State of Delaware and changed our name to Yayi International Inc. Acquisition of Milkgoat Industrial On June 6, 2008, pursuant to an agreement and plan of merger, or the Merger Agreement, we, our wholly owned subsidiary, Ardmore Acquisition Corp., Milkgoat Industrial and Tryant consummated a merger, or the Merger, pursuant to which Ardmore Acquisition Corp. was merged with and into Milkgoat Industrial. As the surviving entity in the Merger, Milkgoat Industrial became our wholly-owned subsidiary. PROSPECTUS Subject to completion, dated July 14, 2011 5,575,000 Shares YAYI INTERNATIONAL INC. Common stock, par value $0.001 per share _________________________ This prospectus relates to 5,575,000 shares of common stock of Yayi International Inc. that may be sold from time to time by the selling stockholders named in this prospectus, which include: 4,460,000 shares of common stock issuable to the selling stockholders upon conversion of $8,920,000 aggregate amount of 9% convertible promissory notes, or the Convertible Notes; and 1,115,000 shares of common stock issuable to the selling stockholders upon the exercise of Series F common stock purchase warrants, or the Series F Warrants. We will not receive any proceeds from the sales of outstanding shares of common stock by the selling stockholders, but we will receive funds from the exercise of Series F Warrants held by the selling stockholders, if exercised for cash. Our common stock is quoted on the Over-the-Counter Bulletin Board, or the OTCBB, under the symbol YYIN. The closing price for our Common Stock on July 8, 2011 was $0.52 per share, as reported on the OTCBB. You are urged to obtain current market quotations of our Common Stock before purchasing any of the shares being offered for sale pursuant to this prospectus. The shares of our common stock offered under this prospectus are being registered to permit the selling stockholders to sell the shares from time to time in the public market. The selling stockholders may sell the shares through ordinary brokerage transactions or through any other means described in the section titled Plan of Distribution. We do not know when or in what amount the selling stockholders may offer the shares for sale. The selling stockholders may sell any, all or none of the shares offered by this prospectus. Investing in the shares being offered pursuant to this prospectus involves a high degree of risk. You should carefully read and consider the information set forth in the section of this prospectus titled Risk Factors, beginning on page 8, when determining whether to purchase any of these shares. 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 , 2011. In connection with the Merger, all of the outstanding shares of Milkgoat Industrial were converted into an aggregate of 22,325,000 shares of our common stock, par value $0.001 per share, or the Common Stock. In addition, Jeff D. Jenson, Steve Markee and Alex Ferries resigned from their positions as our directors and Li Liu, Fung Shek, and Cili Yan were appointed as our new directors. Our executive officers were also replaced by the Milkgoat China s executive officers upon the closing of the Merger. Private Placement Transaction in 2008 Contemporaneously with, and as a condition to, the completion of the Merger, we issued, pursuant to an amended and restated securities purchase agreement, 52 units to certain investors for an aggregate purchase price of $1.3 million. Each unit consisted of: (i) an 8% convertible promissory note in the principal amount of $25,000 and (ii) series A common stock purchase warrant to acquire 11,575 shares of our Common Stock, or the Series A Warrant. As a result, we issued to the investors an aggregate of $1,300,000 principal amount of 8% convertible promissory notes and the Series A Warrants to purchase 601,900 shares of our Common Stock. We paid the placement agent, WestPark Capital, Inc., or WestPark, $104,000 in commissions and approximately $20,000 for expenses (including its non-accountable expense allowance) for its services in the offering and issued to it and its designees series D common stock purchase warrants (with the same terms as the Series A Warrants) to acquire an aggregate of 144,448 shares of our Common Stock, or the Series D Warrants. Private Placement Transaction in 2009 On June 18, 2009, we entered into a series A preferred stock purchase agreement, or the Stock Purchase Agreement with our majority shareholder, Global Rock Stone Industrial Ltd, a BVI company, or Global Rock, Milkgoat Industrial, Milkgoat China, the individuals named thereto and an accredited investor, SAIF Partners III L.P., or SAIF. Pursuant to the Stock Purchase Agreement, we issued and sold to SAIF 1,530,612 shares of our series A preferred stock, par value $0.001 per share, or the Series A Preferred Stock, at a price per share of $9.80 for an aggregate purchase price of $15.0 million. The Series A Preferred Stock is convertible into our Common Stock at an initial conversion price at $0.98 per share, which conversion price is subject to stock split, recapitalization and other anti-dilution protection. In anticipation of the above private placement transaction, on June 16, 2009, we filed a Certificate of Designation of Series A Preferred Stock with the Secretary of State of the State of Delaware, or the Certificate, which became effective upon filing. Pursuant to the Certificate, there are 1,530,612 shares of Series A Preferred Stock authorized. The holders of the Series A Preferred Stock are entitled to receive non-cumulative dividends, when, as and if declared by the Board. The shares of Series A Preferred Stock may be converted into the Company s Common Stock at the option of the holders of the Series A Preferred Stock in whole or in part at any time at an initial conversion price of $0.98, subject to future adjustments set forth in the Certificate. As described below, the Certificate was amended and restated by us on July 20, 2010. Private Placement Transaction in 2010 On September 27, 2010, we entered into a securities purchase agreement, or the Securities Purchase Agreement, with 119 U.S. accredited investors, or the PIPE Investors, and Euro Pacific Capital, Inc., or Euro Pacific, as representative of the PIPE Investors, pursuant to which we issued and sold to the PIPE Investors 892 units at a purchase price of $10,000 per unit, resulting in gross proceeds of $8.92 million to us. Each unit consists of a three-year, 9% Convertible Note in the principal amount of $10,000, and a three-year Series F Warrant, to purchase 1,250 shares of our Common Stock at an exercise price of $2.50 per share. The Convertible Notes are payable at an interest rate of 9% per annum, semiannually in arrears on the last day of the first and third calendar quarters commencing March 31, 2011 and mature on September 26, 2013, or the Maturity Date. The Convertible Notes are also convertible into shares of Common Stock at any time prior to the Maturity Date at $2.00 per share, which conversion price is subject to weighted average and other customary anti-dilution protections. At any time after September 26, 2011, we may redeem all but not less than all of the outstanding principal amount of any Convertible Note by payment of 108% of the outstanding principal amount of the Convertible Note, together with accrued but unpaid interest. The Series F Warrants entitle the PIPE Investors to purchase an aggregate of 1,115,000 shares of Common Stock at an initial exercise of $2.50 per share, which exercise price is subject to the customary weighted average and stock based anti-dilution protection. The Series F Warrants may be exercised in a cash or cashless way at any time upon the election of the holders until September 26, 2013. Euro Pacific acted as the sole placement agent of this private placement transaction, in which it received from us a cash commission of $713,600, which is equal to 8% of the gross proceeds of the financing. In addition, we issued Series F Warrants to the designees of Euro Pacific to purchase an aggregate of 312,200 shares of Common Stock at an exercise price of $2.50 per share, as partial compensation for services provided by them in connection with the private placement transaction. Corporate Information All of our business operations are conducted through our indirectly, wholly-owned Chinese subsidiaries. The following chart reflects our organizational structure as of the date of this prospectus. Our corporate headquarters are located at No. 9 Xingguang Road, Northern Industrial Park of Zhongbei Town, Xiqing District, Tianjin 300384, China. Our telephone number is (86)22-2798-4033. We maintain a website at http://www.milkgoatchina.com that contains information about us, but that information is not a part of this prospectus. The Offering Common Stock offered by selling stockholders 5,575,000 shares, consisting of 4,460,000 shares of Common Stock issuable upon the conversion of the Convertible Notes and 1,115,000 shares of Common Stock issuable upon the exercise of Series F Warrants held by the selling stockholders. Common Stock outstanding before the offering 26,454,558 shares Common Stock outstanding after the offering, assuming all the shares are issued upon the conversion of the Convertible Notes and all the Series F Warrants held by selling stockholders are exercised for cash. 32,029,558 shares Proceeds to us We will not receive any proceeds from the sale of Common Stock covered by this prospectus. We will, however, receive approximately $2.79 million from the exercise of the warrants held by the selling stockholders, if all of such warrants are exercised for cash. Trading Symbol Our Common Stock is quoted on the OTCBB under the symbol YYIN Summary Consolidated Financial Information The following summary consolidated statement of income data for the years ended March 31, 2011 and October 31, 2009 and for the five months ended March 31, 2010 and 2009 and the consolidated balance sheet data as of March 31, 2011 and 2010 are derived from our consolidated financial statements included in this prospectus. The financial information provided for the five months ended March 31, 2009 is unaudited, since it represented an interim period of the fiscal year ended October 31, 2009. Such unaudited financial information includes all adjustments, consisting of only normal recurring accruals, which our management considers necessary for the fair presentation of our financial position and results of operations for such interim periods. The data set forth below should be read in conjunction with Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes appearing elsewhere in this prospectus. Our historical results are not necessarily indicative of our results for any future periods. STATEMENT OF INCOME Year Ended March 31, Five Months Ended March 31, Year Ended October 31, 2011 2010 2009 2009 (Unaudited) Net sales $26,909,879 $6,085,193 $9,283,420 $24,845,685 Operating expenses (16,657,594) (5,226,650) (2,659,055) (7,732,636) Operating income (Loss) 176,833 (1,511,099) 3,731,656 9,088,040 Income tax (expense) benefit (468,086) 289,093 (869,614) (2,201,032) Net (loss) income from continuing operations $(1,291,499) $(1,602,795) $2,175,164 $5,395,981 Earnings Per Share Basic $(0.05) $(0.06) $0.09 $0.22 Diluted $(0.05) $(0.06) $0.09 $0.22 BALANCE SHEET DATA As of March 31, 2011 2010 Working capital $9,738,658 $2,958,109 Current assets 25,772,598 13,147,476 Total assets 55,594,305 39,803,111 Current liabilities 16,033,940 10,189,367 Total liabilities 28,795,017 15,519,177 Stockholders equity $11,054,123 $10,019,063

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+PROSPECTUS SUMMARY This summary highlights information in this document. You should carefully review the more detailed information and financial statements included in this document and other material that may be available. The summary is not complete and may not contain all of the information you may need to consider before investing in our common stock. We urge you to carefully read this document and other material that may be available, including the "Risk Factors and the financial statements and their accompanying notes. The Company Imaging Diagnostic Systems, Inc. ( IDSI ) is a development stage medical technology company. Since inception in December 1993, we have been engaged in the development and testing of a laser breast imaging system that uses computed tomography and laser techniques designed to detect breast abnormalities. The CT Laser Mammography system ( CTLM ) is currently being commercialized in certain international markets where regulatory approvals have been obtained. However, it is not yet approved for sale in the U.S. market. The CTLM system must obtain marketing clearance through the U.S. Food and Drug Administration ( FDA ) before commercialization can begin in the U.S. market. Our financial statements have been prepared assuming that we will continue as a going concern. Our auditors, in their report for the fiscal year ended June 30, 2011, stated that we have incurred recurring operating losses and will have to obtain additional capital to sustain operations. These conditions raise substantial doubt about our ability to continue as a going concern. Management s plans in regard to these matters are also described in Note 5 Going Concern , in the Notes to the Financial Statements. The accompanying financial statements to this prospectus do not include any adjustments to reflect the possible effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Originally, the FDA determined the CTLM to be a new medical device for which there was no predicate device and designated it as a Class III medical device. Consequently; the CTLM was required to go through the FDA Premarket approval ( PMA ) application process. In May 2003 we filed a PMA application for the CTLM with the FDA. In August 2003, we received a letter from the FDA citing deficiencies in our PMA application requiring a response to the deficiencies. We initially planned on submitting an amendment to the PMA application to resolve the deficiencies and requested an extension. In March 2004 we received an extension to respond with the amendment; however, in October 2004, we made a decision to voluntarily withdraw the original PMA application and resubmit a modified PMA in a simpler and more clinically and technically robust filing. In November 2004, we received a letter from the FDA stating that the CTLM study has been declared a Non-Significant Risk ( NSR ) study when used for our intended use. In 2005, we initiated the PMA process by designing a new clinical study protocol and a modified intended use, which limited the participants in the study to patients with dense breast tissue. The inclusion criteria was modified because we believed that we would be more successful in proving our hypothesis of the CTLM system s intended use and have the most success at obtaining marketing clearance from the FDA. Concurrently, we identified qualified clinical sites and retained them to proceed with our clinical study. In 2006, we made changes to bring the CTLM system to its most current design level. We believe these changes improved the CTLM s image quality and reliability. Upgraded CTLM systems were installed at our U.S. clinical sites and data collection proceeded in accordance with our clinical protocol. The objective was to demonstrate the safety and efficacy of the CTLM system when used per the Intended Use statement. The data collection continued from 2006 to 2010, progressing slowly due to low patient volume pursuant to the inclusion criteria of our clinical protocol. We announced in March 2009 that our research and development team achieved a technical breakthrough with a new reconstruction algorithm that improved the visualization of angiogenesis in the CTLM images. Angiogenesis is the process in which new blood vessels are formed in response to a chemical signal sent out by cancerous tumors. The CTLM visualizes the blood distribution in the breast, to detect the new blood vessels (angiogenesis) required for cancerous lesions to grow. The improved algorithm enhances the images by reducing the number of artifacts occasionally produced during an examination, thereby making diagnosis easier. We also incorporated streamlined 10-Q Table of Contents IMAGING DIAGNOSTIC SYSTEMS, INC. A Development Stage Company (Unaudited) Condensed Statements of Operations Three Months Ended From Inception September 30, December 10, 1993 to 2011 2010 September 30, 2011 * Net Sales $ 38,409 $ 11,461 $ 2,418,191 Gain on sale of fixed assets - - 2,794,565 Cost of Sales 4,729 4,259 948,611 Gross Profit 33,680 7,202 4,264,145 Operating Expenses: General and administrative 741,813 565,674 62,412,044 Research and development 212,905 239,800 23,535,742 Sales and marketing 101,557 74,336 9,667,778 Inventory valuation adjustments 7,739 5,687 4,923,184 Depreciation and amortization 16,715 27,699 3,419,140 Amortization of deferred compensation - - 4,064,250 1,080,729 913,196 108,022,138 Operating Loss (1,047,049 ) (905,994 ) (103,757,993 ) Interest income 187 312 311,021 Other income 6,404 35,664 1,000,450 Other income - LILA Inventory - - (69,193 ) Change in fair value of derivative liability 389,528 (19,355 ) 460,410 Interest expense (264,489 ) (67,092 ) (9,770,761 ) Net Loss (915,419 ) (956,465 ) (111,826,066 ) Dividends on cumulative Preferred stock: From discount at issuance - - (5,402,713 ) Earned - - (1,445,047 ) Net loss applicable to common shareholders $ (915,419 ) $ (956,465 ) $ (118,673,826 ) Net Loss per common share: Basic and diluted $ (0.00 ) $ (0.00 ) $ (0.41 ) Weighted average number of common shares outstanding: Basic and diluted 966,093,349 853,250,235 288,733,313 * The numbers presented from inception December 10, 1993 to June 30, 2005 are unaudited by our current auditor. The accompanying notes are an integral part of these condensed financial statements. 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 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, or a non- accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non Accelerated filer x Smaller reporting company (Do not check if a smaller reporting company) S-1 Main Table of Contents numerical methods into the software so that the new algorithm does not require additional computing resources, allowing us to provide the improved functionality to existing customers as a software upgrade. As of May 2009, 10 clinical sites had participated in the clinical trials and at the time we believed we had sufficient clinical data to support our PMA application but only our independent biostatistician could make that determination. However, at the time we did not have sufficient financing to perform the statistical analysis study, support the clinical sites, initiate the reading phase and complete the submission of the PMA application to the FDA. Through the years, new MRI and other dedicated breast imaging systems gained FDA marketing clearance pursuant to applications under the FDA s Section 510(k) premarket notification of intent to market (a Section 510(k) premarket notification ). In the last several years, the De Novo 510(k) process became an alternate pathway for new technologies with low to moderate risk an opportunity to seek FDA marketing clearance through this simpler process. In addition, laser safety data and clinical safety and efficacy data were obtained through previous clinical trials to support an FDA application through the traditional 510(k) process. We believe our CTLM system is of low to moderate risk due to the series of technical studies conducted as well as the series of clinical studies we were engaged in which led the FDA to determine in 2004 that our clinical studies were a Non Significant Risk (NSR) device study. A Section 510(k) premarket notification is a premarket submission made to the FDA to demonstrate that the device to be marketed is at least as safe and effective as, that is, substantially equivalent to, a legally marketed device that is not subject to PMA. Submitters must compare their device to one or more similar legally marketed devices and make and support their substantial equivalency claims. A legally marketed device is a device that was legally marketed prior to May 28, 1976 for which a PMA is not required, or a device which has been reclassified from Class III to Class II or I, or a device which has been found to be substantially equivalent through the 510(k) process. The legally marketed device(s) to which equivalence is drawn is commonly known as the "predicate" device. To submit a Section 510(k) premarket notification application, a company must meet the following guidelines: To demonstrate substantial equivalence to another legally U.S. marketed device, the 510(k) applicant must demonstrate that the new device, in comparison to the predicate: has the same intended use as the predicate; and has the same technological characteristics as the predicate; or has the same intended use as the predicate; and has different technological characteristics when compared to the predicate, and does not raise new questions of safety and effectiveness; and demonstrates that the device is at least as safe and effective as the legally marketed device. One possible outcome resulting from applying for a Section 510(k) premarket notification of intent to market that we believed would have been an option, was the evaluation of automatic class III designation, commonly referred to De Novo process . The De Novo process is an alternate pathway provided by the FDA to classify certain new devices that had automatically been placed in Class III due to lack of a predicate. The De Novo classification process was created to provide a mechanism for the classification of certain lower-risk devices for which there is no predicate, but would otherwise fall into Class III. The De Novo process is most applicable when the risks of a device are well-understood and appropriate special controls can be established to mitigate those risks. The De Novo process cannot be requested until a Section 510(k) premarket notification has been submitted and the FDA responds with a determination that the device is not substantially equivalent (NSE) to the predicate device. The FDA then classifies the applicant devices into Class III designation. Applicants who receive a class III determination from the FDA may request an evaluation for reclassification into Class I or II. Although we did not have a final determination on whether the clinical collection allotment for the PMA study was complete, in March 2010, we decided to focus on the possibility of obtaining FDA marketing clearance through a Section 510(k) premarket notification for our CTLM system instead of a PMA application based on our own research of other medical imaging devices that received a Section 510(k) premarket notification, such as the Aurora MRI Breast Imaging System (the breast MRI ). Other sources of our research were obtained through reading medical imaging industry publications, the FDA s website, and discussions with attendees at medical imaging trade shows; specifically the Radiological Society of 10-Q Table of Contents IMAGING DIAGNOSTIC SYSTEMS, INC. (A Development Stage Company) (Unaudited) Condensed Statement of Cash Flows Three Months From Inception Ended September 30, December 10, 1993 to 2011 2010 September 30, 2011 * Cash flows from operations: Net loss $ (915,419 ) $ (956,466 ) $ (111,826,066 ) Changes in assets and liabilities 239,743 319,097 35,339,668 Net cash used in operations (675,676 ) (637,369 ) (76,486,398 ) Cash flows from investing activities: Proceeds from sale of property & equipment - - 4,390,015 Capital expenditures - - (7,578,436 ) Net cash provided (used in) investing activities - - (3,188,421 ) Cash flows from financing activities: Repayment of capital lease obligation - - (50,289 ) Other financing activities 507,500 - 9,424,530 Proceeds from issuance of preferred stock - - 18,389,500 Net proceeds from issuance of common stock - 800,000 51,932,037 Net cash provided by financing activities 507,500 800,000 79,695,778 Net increase (decrease) in cash (168,176 ) 162,631 20,959 Cash, beginning of period 189,135 73,844 - Cash, end of period $ 20,959 $ 236,475 $ 20,959 * The numbers presented from inception December 10, 1993 to June 30, 2005 are unaudited by our current auditor. The accompanying notes are an integral part of these condensed financial statements. Explanatory Note Imaging Diagnostic Systems, Inc. (the Company or IDSI ) is filing this Amendment No. 3 to our Registration Statement on Form S-1 originally filed with the Securities and Exchange Commission (the SEC ) on July 12, 2011 (the Original Filing ), amended on September 28, 2011 (the Amendment No. 1 Filing ), and amended on October 26, 2011 (the Amendment No. 2 Filing ) to address comments from the staff of the SEC in connection with the staff s review of the Amendment No. 2 Filing. We are filing this Amendment No. 3 in response to further SEC staff comments to clarify the disclosure on the FDA process, revise our Risk Factor pertaining to accrued payroll taxes, penalties and interest owed to government agencies, revise our Use of Proceeds disclosure, added a risk factor regarding obligations to our current vendors; to amend the Report of our Independent Registered Public Accounting Firm dated September 22, 2011 and to add the word Unaudited in the inception to date column where applicable in our Financial Statements. We have also updated disclosures and risk factors where necessary to reflect our current stock price and its effect on such disclosures and risk factors. S-1 Main Table of Contents North America in Chicago, IL in November 2009; Arab Health Show in Dubai, UAE in January 2010, and European Congress of Radiology in Vienna, Austria in March 2010. We began the process of examining the various potential predicate devices that could be credible to support our Section 510(k) premarket notification application. In July 2010, we made our decision to select as our predicate device the breast MRI. This decision was made as a result of our examination of comparative clinical images between CTLM and breast MRI, which are both functional molecular imaging devices having the ability to visualize angiogenesis in the breast. We began preparing the Section 510(k) premarket notification submission and engaged the services of a FDA regulatory consultant to review our preliminary draft and then re-engaged the services of our FDA regulatory counsel to complete the Section 510(k) premarket notification application and to submit it to the FDA. On November 22, 2010, we submitted a Section 510(k) premarket notification application to the FDA for its review. We believed that the Section 510(k) premarket notification submission was the best process to obtain U.S. marketing clearance in the least burdensome and most timely manner. FDA marketing clearance would enable us to market and sell the CTLM system throughout the United States. Also, we believed that receipt of U.S. marketing clearance will substantially enhance our ability to sell the CTLM in the international market. On January 21, 2011, we received a request for additional information from the FDA regarding our Section 510(k) premarket notification application. A request for additional information is quite common during the FDA review process. Due to the extensive amount of additional information requested, we filed the response to the FDA request on July 8, 2011. Upon receipt of our response at the FDA offices, the FDA 90-day response time clock was re-activated. Consequently, we expected to get either an FDA determination on our Section 510(k) application or another request for additional information within the next 90-day time frame. On August 2, 2011, we received official notification from the FDA that the review of our Section 510(k) premarket notification application had been completed and that the FDA determined that the device, (CTLM ), is not substantially equivalent to devices marketed in interstate commerce prior to May 28, 1976, the enactment date of the Medical Device Amendments, or to any device which has been reclassified into Class I (General Controls) or Class II (Special Controls), or to another device found to be substantially equivalent through the Section 510(k) process. This decision was based on the fact that the FDA was not aware of a legally marketed preamendments device labeled or promoted for using Diffuse Optical Tomography (DOT) to image the optical attenuation properties of breast tissue in order to aid the diagnosis of cancer, other conditions, diseases, or abnormalities. Although the FDA did not use the term rejected in the NSE letter, the effect of this letter is that our Section 510(k) premarket notification of intent to market the device (CTLM ) has been rejected. Therefore, this device was classified by statute into class III (Premarket Approval), under Section 513(t) of the Federal Food, Drug, and Cosmetic Act (the Act ). All FDA determined Class III devices must fall under Section 515(a)(2) of the Act (which) requires a class III device to have an approved application (PMA) before it can be legally marketed. The determination by the FDA that our CTLM imaging technology will now be recognized as a DOT device and that there are no other DOT devices known to the FDA, presents us with a unique technological opportunity. Essentially, IDSI could be the first medical imaging company to file a PMA application for a Diffuse Optical Tomography breast imaging device. Since the FDA has identified CTLM as a class III device, a formal clinical study will be required to obtain PMA approval. We have begun the PMA process and plan to use clinical studies previously collected from 2006 to 2010 , if permitted to do so by the FDA, in addition to new studies we plan to collect over the next several months. Essentially, the FDA has stated that the CTLM technology will require a full PMA application based on a DOT clinical imaging format. Previously collected patient data from 2006 to 2010 was based on a protocol identifying CTLM as an adjunct to mammography . We believe that our technology has always been based on a DOT scientific principle, that our patient collection technique will not change with a future DOT protocol, and that the patient inclusion/exclusion criteria for the new study will not change. Consequently, it is our belief that previously collected and non-analyzed patient data may be allowed by the FDA to be included in a future DOT protocol. This belief will either be accepted or rejected during the official pre- IDE meeting, which is a pre-clinical meeting, to be held at the FDA. Although we have collected substantial clinical data from 2006 to 2010 , it is very likely that additional cases will be needed to support the statistical analysis protocol devised to demonstrate safety and efficacy of the CTLM system. Ultimately, the FDA must decide as to how many patient cases will need to be bio-statistically analyzed to support the CTLM intended use claims. We would rely on our independent bio-statistician regarding the actual number of case studies required; however, the FDA has the ultimate authority to determine the number of clinical cases needed for the PMA application. Like other governmental institutions, the FDA prefers to reserve the right to make bio-statistical 10-Q Table of Contents IMAGING DIAGNOSTIC SYSTEMS, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - BASIS OF PRESENTATION We have prepared the accompanying unaudited condensed financial statements of Imaging Diagnostic Systems, Inc. in accordance with generally accepted accounting principles for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for three month period ended September 30, 2011 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending June 30, 2012. These condensed financial statements have been prepared in accordance with Financial Accounting Standards guidance for Development Stage Enterprises, and should be read in conjunction with our condensed financial statements and related notes included in our Annual Report on Form 10-K filed on September 22, 2011. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires that management 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 financial statements and the reported amount of expenses incurred during the reporting period. Actual results could differ from those estimates. NOTE 2 - GOING CONCERN Imaging Diagnostic Systems, Inc. ( IDSI ) is a development stage enterprise and our continued existence is dependent upon our ability to resolve our liquidity problems, principally by obtaining additional debt and/or equity financing. IDSI has yet to generate a positive internal cash flow, and until significant sales of our product occur, we are dependent upon debt and equity funding. See Item 2 Management s Discussion and Analysis of Financial Condition and Results of Operations . In the event that we are unable to obtain debt or equity financing or we are unable to obtain such financing on terms and conditions acceptable to us, we may have to cease or severely curtail our operations, which would materially impact our ability to continue as a going concern. Management has been able to raise the capital necessary to reach this stage of product development and has been able to obtain funding for capital requirements to date. Recently we have relied on raising additional capital through our new Private Equity Credit Agreement with Southridge Partners II, L.P. ( Southridge ) dated January 7, 2010, which replaced the Charlton Agreement and through the issuance of short term promissory notes. We also intend to raise capital through other sources of financing. See Part II, Item 5. Other Information Financing/Equity Line of Credit. In the event we are unable to draw from this new private equity line, alternative financing will be required to continue operations, and there is no assurance that we will be able to obtain alternative financing on commercially reasonable terms. There is no assurance that, if and when Food and Drug Administration ( FDA ) marketing clearance is obtained, the CTLM will achieve market acceptance or that we will achieve a profitable level of operations. We currently manufacture and sell our sole product, the CTLM - Computed Tomography Laser Mammography. We are appointing distributors and installing collaboration systems as part of our global commercialization program. We have sold 16 systems as of September 30, 2011; however, we continue to operate as a development stage enterprise because we have yet to produce significant revenues. We are attempting to create increased product awareness as a foundation for developing markets through an international distributor network. We may be able to exit reporting as a Development Stage Enterprise upon two successive quarters of sufficient revenues such that we would not have to utilize other funding to meet our quarterly operating expenses. Calculation Of Registration Fee Title OF Each Class Of Securities To Be Registered Amount to be registered Proposed Maximum Offering Price per Share (2) Proposed Maximum Aggregate Offering Price (2) Amount of Registration Fee(5) Common Stock, no par value (1) 180,000,000 $0.0065 $1,170,000.00 $134.08 TOTAL 180,000,000 $0.0065 $1,170,000.00 $134.08 (1) This registration statement covers the shares that become due and payable to the selling security holder as settlement for put notices and the related imputed interest as a result of the discount of 93% of the three lowest bid prices in the ten day window following the date of each put notice. In the event that adjustment provisions of the equity line agreement require us to issue more shares than are being registered in this registration statement, for reasons other than those stated in Rule 416 of the Securities Act, we will file a new registration statement to register those additional shares. (2) Estimated solely for purposes of calculating the registration fee according to Rule 457(c) of the Securities Act of 1933, as amended, on the basis of the average bid and ask price of our common stock on the NASDAQ Electronic Bulletin Board on November 30 , 2011 . (3) In the event that the shares registered in this prospectus are insufficient to meet the delivery requirement at the actual time of the put date settlement, we will file a new registration statement to register the additional shares. (4) All of the shares of common stock registered in this registration statement will be sold by the selling security holder. (5) A registration fee of $359.91 was paid on July 12, 2011 upon the initial filing of the Registration Statement on Form S-1, which is amended by this Form S-1/A3. The fee was calculated on the average bid and ask price of our common stock on the NASDAQ Electronic Bulletin Board on July 11, 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 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. S-1 Main Table of Contents determinations on an individual case-by-case basis. Therefore, it is very likely that a clinical trial will need to begin again, which will require approval by an IRB (Institutional Review Board - an organization required to review and approve clinical protocols outlining the study to be conducted at the hospital or imaging sites). In addition, after the collection of clinical data is completed, a radiologist reading study of the clinical cases will be required and a statistical analysis of the results of the reading study will have to be performed in order to support the "Intended Use" and demonstrate safety and efficacy of the CTLM system prior to PMA submission. We need to secure funding to continue with the PMA process. If funding is obtained, then we can begin to: contract with the FDA regulatory consultants, contract with the identified clinical sites (hospitals and imaging centers) to collect the clinical data, seek an IRB approval of the clinical protocol, which could take up to 30 to 120 days, place the CTLM system at the selected sites, train the clinical staff on the CTLM system and the clinical protocol at the selected sites, and recruit patients to volunteer for the clinical study. Our main hurdle for completion of the PMA application is our lack of financial resources. Historically, we have contracted with outside FDA consultants both for guidance and to ensure that our FDA related submissions meet FDA requirements, as we did not have sufficient resources to hire qualified full-time FDA clinical staff. Further, this approach is more cost effective than employing full time FDA experienced staff that will not be required once FDA marketing clearance has been obtained. Our management has identified FDA regulatory consultants who have proven ability in achieving FDA marketing clearance for diagnostic imaging devices. We cannot move forward until such time as we secure sufficient financing to engage these FDA regulatory consultants. In previous filings, management had disclosed the potential to have our CTLM device approved through the FDA De Novo process. This process would only become an option to us if the FDA did not approve our 510(k) premarket notification of intent to market the device. While waiting for a ruling from the FDA on our 510(k) premarket notification of intent to market the CTLM , management continued to research the advantages and disadvantages regarding the potential option to initiate a De Novo application if the FDA determined our traditional 510(k) application to be Not Substantially Equivalent . Our research identified several articles illustrating the potential pitfalls of going down the De Novo pathway. One such article from Medical Device Consultants (MDCI), a full service contract research organization and consulting firm that helps emerging and established firms commercialize novel and innovative medical devices, dated March 21, 2011(included below) best summarizes the issues that we would face if we choose the De Novo pathway. The De Novo process has been around since the implementation of the FDA Modernization Act of 1997 (FDAMA). The FDAMA was intended to help improve the efficiency of bringing low-risk medical devices to market, allowing for simpler reclassification of devices that were classified as Class III due to the lack of a suitable predicate. The section of the FDAMA that handled this aspect of medical device classification (Section 513(f)(2)) became known as the De Novo process. De Novo is a two-step process that requires a company to submit a 510(k) and complete a standard review, including an analysis of the risk to the patient and operator associate with the use of the device and the substantial equivalence rationale. Once that has been accomplished, and the medical device in question has been determined to be Not Substantially Equivalent (NSE) by the FDA, the product is automatically classified as a Class III device. The manufacturer can then submit a request for evaluation of Automatic Class III designation to have the product reclassified from Class III into Class I or Class II. The FDA will review the device classification proposal and either recommend special controls to create a new Class I or II device classification or determine that the product is a Class III device. If FDA determines that the level of risk associated with the use of the device is appropriate for a Class II or Class I designation, then the product can be cleared as a 510(k) and FDA will issue a new classification regulation and product code. This also adds the device in question to the predicate pool, which in turn broadens the market for other medical device companies considering products in a similar therapeutic area. If the device is not approved through De Novo, then it must go through the standard premarket approval (PMA) process for Class III devices. The number of FDA NSE determinations due to the lack of a suitable predicate is very low for those low risk medical devices that have the potential for reaching the market via the De Novo process. Medical device manufacturers are attracted to the cost efficiencies associated with the De Novo process when compared against the investment and post-market FDA oversight associated with a PMA. Unfortunately, the time to market for devices eligible for the De Novo process can be very long. FDAMA calls for the FDA to review and return a decision on a De Novo reclassification submission within 60 days of receipt (the initial submission must be sent by the 10-Q Table of Contents NOTE 3 - INVENTORY Inventories included in the accompanying condensed balance sheet are stated at the lower of cost or market as summarized below: Sept. 30, 2011 June 30, 2011 Unaudited Raw materials consisting of purchased parts, components and supplies $ 499,371 $ 508,176 Work-in-process including units undergoing final inspection and testing 31,662 28,943 Finished goods 185,678 184,443 Sub-Total Inventories 716,711 721,562 Less Inventory Reserve (399,000 ) (399,000 ) Total Inventory - Net $ 317,711 $ 322,562 We review our Inventory for parts that have become obsolete or in excess of our manufacturing requirements and our Finished Goods for valuation pursuant to our Critical Accounting Policy for Inventory. For the quarter ending September 30, 2011, we reclassified the net realizable value of $11,928 from Clinical Equipment to Consignment Inventory due to a CTLM system being purchased by one of our Distributors in an installment sale. For the fiscal year ending June 30, 2011, we reclassified the net realizable value of $6,525 of CTLM systems in Inventory to Clinical equipment. For the fiscal year ending June 30, 2009, we reclassified the net realizable value of $8,591 as this CTLM system is being used as a clinical system at the University of Florida. For the fiscal year ending June 30, 2008 since such finished goods are being utilized for collecting data for our FDA application, we reclassified the net realizable value of $311,252 of CTLM systems in Inventory to Clinical equipment. For the fiscal year ending June 30, 2010 we identified $399,000 of Inventory that we deem impaired due to the lack of inventory turnover. There were no changes to Inventory Reserve for the quarter ending September 30, 2011. NOTE 4 - REVENUE RECOGNITION We recognize revenue in accordance with the guidance provided in SEC Staff Accounting Bulletin No. 104. We sell our medical imaging products, parts, and services to independent distributors and in certain unrepresented territories directly to end-users. Revenue is recognized when persuasive evidence of a sales arrangement exists, delivery has occurred such that title and risk of loss have passed to the buyer or services have been rendered, the selling price is fixed or determinable, and collectibility is reasonable assured. Unless agreed otherwise, our terms with international distributors provide that title and risk of loss passes F.O.B. origin. To be reasonably assured of collectibility, our policy is to minimize the risk of doing business with distributors in countries which are having difficult financial times by requesting payment via an irrevocable letter of credit ( L/C ) drawn on a United States bank prior to shipment of the CTLM . It is not always possible to obtain an L/C from our distributors so in these cases we must seek alternative payment arrangements which include third-party financing, leasing or extending payment terms to our distributors. NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS In June 2009, FASB approved the FASB Accounting Standards Codification ( the Codification ) as the single source of authoritative nongovernmental GAAP. All existing accounting standard documents, such as FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other related literature, excluding guidance from the The information in this 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 Prospectus is not an offer to sell these securities and is not seeking an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED December __, 2011 PROSPECTUS IMAGING DIAGNOSTIC SYSTEMS, INC. 180,000,000 shares of common stock This Prospectus is part of the registration statement we filed with the Securities and Exchange Commission using a shelf registration process. This means: We may issue up to 180,000,000 shares of our common stock pursuant to our $15 million Private Equity Credit Agreement dated November 23, 2009 and amended January 7, 2010 (the Southridge Private Equity Credit Agreement ) between us and the selling stockholder, Southridge Partners II, LP ( Southridge ), for which we would receive net proceeds after 7% discount of approximately $736,560 upon the exercise of our put options. See Financing/Equity Line of Credit . Proceeds from our exercise of the put options would be used for general corporate purposes. Southridge is an underwriter within the meaning of the Securities Act of 1933 in connection with its sales of our common stock acquired under the Southridge Private Equity Credit Agreement. Our common stock is traded on the OTC Bulletin Board under the symbol "IMDS". On November 30, 2011 the closing bid price of our common stock on the OTC Bulletin Board was $0.0044 . THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 8 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 date of this Prospectus is December __, 2011 S-1 Main Table of Contents manufacturer within 30 days of receiving NSE notification). In practice, however, the amount of time taken to review De Novo requests by the FDA and issue the special controls guidance has risen from 62 days in 2006 to 241 days since 2007. Tacked on to the 510(k) review times, devices traveling the De Novo pathway average 482 days of review time from beginning to end. Further compounding the delays associated with De Novo is the fact that the entire process resembles a procedural black hole. The FDA is not required to provide any updates concerning the status of a De Novo application, nor is there any simple way for medical device manufacturers to track a De Novo submission on their own. De Novo is rare in the realm of low-risk medical devices a mere 54 products took this particular route between 1998 and 2009. Given the extensive delays associated with the process, MDCI advises medical device companies to consider all other market approval pathways before deciding on to pursue a De Novo reclassification. Prepared by Benjamin Hunting, Cindy Nolte, and Helen Mayfield MDCI Blogging Team Understanding that the above statements were a fair representation of the regulatory industry's general feelings towards the FDA De Novo process, management decided to accept and heed the FDA's letter (received on August 2, 2011) detailing their decision of CTLM being not substantially equivalent and furthermore, accepting their recommendation that CTLM is a class III device that would require a PMA submission. Other considerations such as comparing time frames between De Novo and the PMA process were taken into account. The average De Novo application took 482 days to be reviewed compared to the average PMA review of 284 days. In addition, upon further review, both the De Novo and PMA process require virtually identical clinical safety and efficacy data; therefore, the PMA path was chosen. Management has identified potential FDA regulatory consultants who can guide us through the complete PMA application process and is presently in contract negotiations with several prospective consulting firms. In summary, our management team believes that the more structured and proven PMA application approach with its semi-rigid timetable for mandatory responses would provide us with the best route to achieve marketing clearance for our innovative new imaging modality that in the future will be classified as Diffuse Optical Tomography. The CTLM system is a Diffuse Optical Tomography (DOT) CT-like scanner. Its energy source is a laser beam and not ionizing radiation such as is used in conventional x-ray mammography or CT scanners. The advantages of imaging without ionizing radiation may be significant in our markets. CTLM is an emerging new imaging modality offering the potential of functional molecular imaging, which can visualize the process of angiogenesis which may be used by the radiologist to distinguish between benign and malignant tissue. X-ray mammography is a well-established method of imaging the breast but has limitations especially in dense breast cases. While x-ray mammography and ultrasound produce two dimensional images (2D) of the breast, the CTLM produces 3D images. Ultrasound is often used as an adjunct to mammography to help differentiate tumors from cysts or to localize a biopsy site. We believe the CTLM will be used to provide the radiologist with additional information to manage the clinical case; help diagnose breast cancer earlier; reduce diagnostic uncertainty especially in mammographically dense breast cases; and may help decrease the number of biopsies performed on benign lesions. Because breast cancers nearly always develop in the dense tissue of the breast (not in the fatty tissue), older women who have mostly dense tissue on a mammogram are at an increased risk of breast cancer. Abnormalities in dense breasts can be more difficult to detect on a mammogram. The CTLM technology is unique and patented. We intend to develop our technology into a family of related products. We believe these technologies and clinical benefits constitute substantial markets for our products well into the future. As of the date of this prospectus we have had no substantial revenues from our operations and have incurred net losses applicable to common shareholders since inception through September 30, 2011 of $118,673,826 after discounts and dividends on preferred stock. We anticipate that losses from operations will continue for at least the next 12 months, primarily due to an anticipated increase in marketing and manufacturing expenses associated with the international commercialization of the CTLM , expenses associated with our FDA approval process, and the costs associated with advanced product development activities. We will need sufficient financing through the sale of equity or debt securities to complete the approval process and, in the event that we obtain marketing clearance, to have sufficient funding to launch the CTLM in the U.S. There can be no assurance that we will obtain this financing. Finally, there can be no assurance that we will obtain FDA marketing clearance, that the CTLM will achieve market acceptance or that sufficient revenues will be generated from sales of the CTLM to allow us to operate profitably. 10-Q Table of Contents Securities and Exchange Commission ( SEC ), have been superseded by the Codification. All other non-grandfathered, non-SEC accounting literature not included in the Codification has become non-authoritative. The Codification did not change GAAP, but instead introduced a new structure that combines all authoritative standards into a comprehensive, topically organized online database. The Codification is effective for interim or annual periods ending after September 15, 2009, and impacts our financial statements as all future references to authoritative accounting literature will be referenced in accordance with the Codification. There have been no changes to the content of our financial statements or disclosures during the quarter ended September 30, 2011 as a result of implementing the Codification. All other issued but not yet effective FASB issued guidances have been deemed to be not applicable hence when adopted, these guidances are not expected to have any impact on the financial position of the company. NOTE 6 STOCK-BASED COMPENSATION The Company relies on the guidance provided by ASC 718, ( Share Based Payments ). ASC 718 requires companies to expense the value of employee stock options and similar awards and applies to all outstanding and vested stock-based awards. In computing the impact, the fair value of each option is estimated on the date of grant based on the Black-Scholes options-pricing model utilizing certain assumptions for a risk free interest rate; volatility; and expected remaining lives of the awards. The assumptions used in calculating the fair value of share-based payment awards represent management s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and the Company uses different assumptions, the Company s stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. In estimating the Company s forfeiture rate, the Company analyzed its historical forfeiture rate, the remaining lives of unvested options, and the amount of vested options as a percentage of total options outstanding. If the Company s actual forfeiture rate is materially different from its estimate, or if the Company reevaluates the forfeiture rate in the future, the stock-based compensation expense could be significantly different from what we have recorded in the current period. The impact of applying ASC 718 approximated $2,290 and $94,043, respectively, in additional compensation expense for the three months ended September 30, 2011 and 2010. The fair value concepts were not changed significantly in ASC 718, however, in adopting this Standard, companies were given the option to choose among alternative valuation models and amortization assumptions. We elected to continue to use the Black-Scholes option pricing model and expense the options as compensation over the requisite service period of the grant. We will reconsider use of the Black-Scholes model if additional information becomes available in the future that indicates another model would be more appropriate, or if grants issued in future periods have characteristics that cannot be reasonably estimated using this model. For purposes of the following disclosures the weighted-average fair value of options has been estimated on the date of grant using the Black-Scholes options-pricing model with the following weighted-average assumptions used for grants for the three months ended September 30, 2011: no dividend yield; expected volatility of 126%; risk-free interest rate of 4%; and an expected eight-year term for options granted. For the quarter ending September 30, 2011, the net income and earnings per share reflect the actual deduction for option expense as a non-cash compensation expense. Stock-based compensation expense recorded during the three months ended September 30, 2011, was $2,290 compared to $94,043 from the corresponding period in fiscal 2010. See Item 2, Results of Operations, Liquidity and Capital Resources, Sale/Lease-Back . The weighted average fair value per option at the date of grant for the three months ended September 30, 2011 using the Black-Scholes Option-Pricing Model was $0.015. The weighted Table Of Contents Forward-Looking Statements 2 Prospectus Summary 3

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+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 information set forth under the headings Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, and the financial statements and the notes to the financial statements included in this prospectus. General Electronic Control Security Inc. is engaged in the design, develop, manufacture and marketing of technology-based integrated entry control and perimeter security solutions. We also perform support services consisting of risk assessment and vulnerability studies to ascertain a client's security requirements in developing a comprehensive risk management and mitigation program as well as product design and engineering services in support of the systems integrators and dealers/installers providing these services to a client. We market our products domestically and internationally to: security system integrators; national and local government entities; large industrial facilities and major office complexes; energy facilities, including nuclear power stations, power utilities and pipelines; and commercial transportation centers, such as airports and seaports. We believe we are one of the few true comprehensive security solution providers in the industry. We are able to analyze a security risk and develop security solutions specifically tailored to mitigate that risk, including design, engineering and manufacturing individual components of a system as may be necessary to deliver a fully integrated security system customized to a client's requirements. We are frequently engaged by security system integrators, security system dealers/installers, and commercial architects and engineers because we are able to deliver the integrated platform of design, engineering services and fully integrated security solutions that support their requirements for the completion of a given project. We believe that we have developed a superior reputation as a provider of integrated security systems since our inception in 1976 because we: offer the complete range of solutions-driven responses to accommodate our customers' needs; offer technologically superior products; are able to design, engineer and manufacture systems customized to our clients' specific requirements; deliver systems that are easy to operate and maintain while providing superior life cycle cost performance compared to systems offered by competitors; have established solid credentials in protecting high value targets; and offer customers perhaps the best warranty in the industry. Drawdown Equity Financing Agreement. On February 8, 2011, we executed a drawdown equity financing agreement and registration rights agreement (collectively the "Agreements") with Auctus Private Equity Fund, LLC ("Auctus"), one of the selling stockholders. In accordance with the Agreements, Auctus has committed, subject to certain conditions, to purchase up to $10 million of our Common Stock, over a term of up to five years commencing from the effective date of the Registration Statement of which this Prospectus forms a part. While we are not required to sell shares under the Agreements, the Agreements give us the option to sell to Auctus shares of Common Stock at a per share purchase price of equal to 96% of the lowest closing volume weighted average price (VWAP) during the five trading days following our delivery to Auctus of a draw-down notice (the "Notice"). At our option, we may set a floor price under which Auctus may not sell the shares which were the subject of the Notice. A floor price, if established by us, would be applicable only to the shares subject to the particular drawdown Notice during the pricing period. This may result in a reduction of the amount of funds raised and ultimately delivered to us at any drawdown closing date. The maximum amount of Common Stock that we can sell pursuant to any Notice is the greater of: (i) an amount of shares with an aggregate maximum purchase price of $200,000 or (ii) 200% of the average daily volume based on the trailing ten (10) trading days preceding the Notice date, whichever is of a larger value. Auctus is not required to purchase the shares, unless the shares which are subject to the Notice have been registered for resale and are freely tradable in accordance with the Federal securities laws, including the Securities Act of 1933, as amended and except for conditions outside of Auctus control. The Company is obligated to file with the U.S. Securities and Exchange Commission (the "SEC") this registration statement on Form S-1 within 180 days from the date of the Agreements and to use all commercially reasonable efforts to have such registration statement declared effective by the SEC within 120 days of filing. The Company has paid to Auctus a non-refundable fee of $5,000 and an additional $7,500 will be taken out of the proceeds of the first drawdown. Summary Financial Information The table below summarizes our audited financial statements for the fiscal years ended June 30, 2010 and 2009, as well as the unaudited financial statements for the nine months ended March 31, 2011 and 2010. Balance Sheet Summary: Fiscal Year Ended At March 31, At June 30, 2010 (Audited) At June 30, 2009 (Audited) 2011 (Unaudited) Balance Sheet Cash $ 168,465 $ 15,735 $ 41,723 Total Assets $ 5,960,425 $ 5,510,138 $ 4,880,552 Total Liabilities $ 2,889,765 $ 2,872,224 $ 1,346,638 Total Stockholders Equity $ 3,070,660 $ 2,637,194 $ 3,533,914 Statement of Operations Summary: For the Fiscal Year Ended June 30 For the Nine Months Ended March 31, 2010 2009 2011 2010 (Audited) (Audited) (Unaudited) (Unaudited) Statement of Operations: Revenue $ 4,513,737 $ 3,472,696 $ 2,888,625 $ 2,923,381 Net Income (Loss) $ 248,266 ) $ (788,992 ) $ 269,498 ) $ 282,743 ) Net loss per common share basic and diluted 0.02 ) (0.08 ) 0.03 ) 0.03 ) THE OFFERING Securities Being Offered: 4,536,863 shares of common stock. Offering Period: Until all shares are sold or until 60 months from the date that the registration statement becomes effective, whichever comes first. Common Stock Outstanding Before the Offering: 10,429,911 shares of common stock issued. Before and After the Offering: After the Offering: 12,429,911 shares of common stock. Use of Proceeds: We will not receive any proceeds from the sale of the common stock by the selling stockholders.

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+PROSPECTUS SUMMARY This summary highlights specific information contained elsewhere or incorporated by reference in this prospectus. However, this summary is not complete and does not contain all of the information you should consider before investing in our common stock, and it is qualified in its entirety by the more detailed information included in or incorporated by reference into this prospectus. To understand this offering fully, you should carefully read this entire prospectus, including the risks discussed under the Risk Factors section and our financial statements and related notes. Our Company We are a bank holding company headquartered in Powhatan, Virginia. Through our wholly-owned bank subsidiary, Central Virginia Bank (the Bank ), we engage in a general community and commercial banking business, targeting the banking needs of individuals and small to medium sized businesses in Powhatan and Cumberland Counties, eastern Goochland County, western Chesterfield and western Henrico Counties. We offer all traditional loan and deposit banking services as well as newer services such as Internet banking, telephone banking, debit cards, and other ancillary services such as the sales of non-deposit investment products through a partnership with Infinex Investments, Inc., a registered broker-dealer and member of NASD, SIPC. We make seasonal and term loans, both alone and in conjunction with other banks or governmental agencies. We also offer other related services, such as ATMs, travelers checks, safe deposit boxes, deposit transfer, notary public, escrow, drive-in facilities and other customary banking services. Our lending policies, deposit products and related services are intended to meet the needs of individuals and businesses in our market area. Our common stock is traded on the Nasdaq Global Market under the ticker symbol CVBK. Market Areas and Growth Strategy The Bank s primary service areas are Powhatan and Cumberland Counties, eastern Goochland County and western Chesterfield and western Henrico Counties of Virginia. Based on FDIC deposit statistics as of June 30, 2010, the Bank has a strong position in both Powhatan and Cumberland Counties with greater than 50% and 75% of the deposits, respectively, in each locality. However, in Goochland, Chesterfield and Henrico Counties, the Bank encounters stronger competition for its banking services from large banks and other community banks located in the Richmond metropolitan area. Due to the current economic environment in our markets and our expectations for the future, our near-term focus will be on continuing to increase our regulatory capital levels. We do not expect a substantial near-term increase in the growth of our assets. At such time that we see the local economy grow and customer demand return, we do expect to prudently increase our lending activities within regulatory capital limitations. We will continue to focus on our current market areas and have no plans to grow outside of our market areas at this time. Corporate Information Our principal executive offices are located at 2036 New Dorset Road, Powhatan, Virginia 23139 and our telephone number is (804) 403-2000. We maintain a website at www.centralvabank.com, which contains information relating to us. Information on our website is not incorporated by reference and is not a part of this prospectus. 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 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. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company x 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 this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. The Offering Securities Offered We are distributing to you, at no charge, one non-transferable subscription right for every one share of our common stock that you owned on the record date, either as a holder of record or, in the case of shares held of record by brokers, banks, or other nominees, on your behalf, as a beneficial owner of such shares, subject to adjustments to eliminate fractional rights. We are offering any shares that are not subscribed for in the rights offering, plus an additional shares of our common stock, in a public offering. Common Shares to be Outstanding If all of our shares of common stock being offered are sold, approximately shares will be outstanding following closing of the offering.1 Basic Subscription Right The basic subscription right will entitle you to purchase shares of our common stock at a subscription price of $ per share for each share of our common stock that you own; however, fractional shares of our common stock resulting from the exercise of the basic subscription right will be eliminated by rounding down to the nearest whole share. Over-Subscription Privilege In the event that you purchase all of the shares of our common stock available to you pursuant to your basic subscription right, you may also choose to subscribe for a portion of any shares of our common stock that are not purchased by our shareholders through the exercise of their basic subscription rights. You may subscribe for shares of common stock pursuant to your over-subscription privilege, subject to the purchase and ownership limitations described below. Limitation on the Purchase of Shares We will not issue shares of common stock pursuant to the exercise of basic subscription rights or over-subscription privileges or to any shareholder who, in our sole opinion, could be required to obtain prior clearance or approval from or submit a notice to any state or federal bank regulatory authority to acquire, own or control such shares if, as of , such clearance or approval has not been obtained and/or any applicable waiting period has not expired. Rights Offering Subscription Price $ per full share, payable in cash. To be effective, any payment related to the exercise of a subscription right must clear prior to the expiration of the rights offering. If the public offering price is less than $ per share, at the closing of the offering we will release from escrow and deliver to the rights offering subscribers that portion of the subscription price equal to the difference between $ and the public offering price, without interest. In accordance with applicable securities laws, we will file with the Securities and Exchange Commission: (i) a supplement to this prospectus once the price of the public offering has been determined to include the public offering price and final rights offering price, and (ii) all marketing materials, as exhibits to the registration statement of which this prospectus is a part or as free writing prospectuses. Record Date 5:00 p.m., Eastern Time, on , 2011 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 November 18, 2011 PRELIMINARY PROSPECTUS Up To $15,000,000 Central Virginia Bankshares, Inc. Common Stock We are distributing to holders of our common stock, at no charge, non-transferable subscription rights to purchase up to shares of our common stock. We refer to this offering as the rights offering. In the rights offering, you will receive one subscription right for each full share of common stock owned at 5:00 p.m., Eastern Time, on , 2011, the record date of the rights offering. Each subscription right will entitle you to purchase shares of our common stock at a subscription price of $ per share, which we refer to as the basic subscription right. If you fully exercise all of your basic subscription rights, and other shareholders do not fully exercise their basic subscription rights, you will be entitled to exercise an over-subscription privilege to purchase a portion of the unsubscribed shares at the same price of $ per share, subject to proration and subject, further, to reduction by us under certain circumstances. To the extent you properly exercise your over-subscription privilege for an amount of shares that exceeds the number of the unsubscribed shares available to you, any excess subscription payments will be returned promptly, without interest or penalty. The subscription rights will expire if they are not exercised by 5:00 p.m., Eastern Time, on , 2011, but we may extend the rights offering for additional periods ending no later than , 2011. Once made, all exercises of subscription rights are irrevocable. We have agreed with to serve as the subscription agent for the rights offering. The subscription agent will hold in escrow the funds we receive from subscribers until we complete or cancel the rights offering. We have agreed with to serve as information agent for the rights offering. Any unsubscribed shares, after taking into account all over-subscription rights exercised, plus an additional shares of our common stock, will be offered in a public offering on a best efforts basis by and as underwriters, at a price currently anticipated to be between $ and $ per share. If the public offering price exceeds $ per share, subscribers for shares in this rights offering will not pay more than $ per share. If the public offering price is less than $ per share, at the closing of the offering we will release from escrow and deliver to the rights offering subscribers that portion of the subscription price equal to the difference between $ and the public offering price, without interest. In accordance with applicable securities laws, we will file with the Securities and Exchange Commission: (i) a supplement to this prospectus once the price of the public offering has been determined to include the public offering price and final rights offering price, and (ii) all marketing materials, as exhibits to the registration statement of which this prospectus is a part or as free writing prospectuses. Because the public offering is on a best-efforts basis, the underwriters are not required to sell any specific number or dollar amount of shares and is not obligated to purchase the shares if they are not sold to the public. We reserve the right to increase the total number of shares offered in the public offering by not more than shares. The public offering is expected to terminate on or about , 2011. All subscriptions for shares in the public offering are irrevocable. We are not requiring an overall minimum subscription to complete the rights and public offering (together, the offering ). However, our board of directors reserves the right to cancel the offering for any reason, including if we do not receive aggregate subscriptions in the offering that we believe will satisfy our capital plans. If we cancel the offering, all subscription payments received will be returned promptly, without interest or penalty. We expect to close the offering on or about , 2011. Expiration of Rights Offering 5:00 p.m., Eastern Time, on , 2011 Procedures for Exercising Rights To exercise your subscription rights, you must take the following steps: If you are a registered holder of our common stock, you must deliver payment and a properly completed rights certificate to the subscription agent to be received before 5:00 p.m., Eastern Time, on , 2011. You may deliver the documents and payments by first class mail or courier service. If you use first class mail for this purpose, we recommend using registered mail, properly insured, with return receipt requested. If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank or other nominee, you should instruct your broker, dealer, custodian bank or other nominee to exercise your subscription rights on your behalf. Please follow the instructions of your nominee, who may require that you meet a deadline earlier than 5:00 p.m., Eastern Time, on , 2011. Non-Transferability of Rights The subscription rights may not be sold, transferred or assigned and will not be listed for trading on The Nasdaq Global Market or on any stock exchange or market Participation of Directors and Officers Each of our directors and executive officers, together with their affiliates, has committed to exercising a portion of his or her basic subscription rights personally. Our board of directors is not making a recommendation regarding your exercise of the subscription rights. You are urged to make your decision to invest based on your own assessment of our business and the 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 of information that you consider to be unfavorable to the exercise of your subscription rights. 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 $ per full share Public Offering Any unsubscribed shares, after taking into account all over-subscription rights exercised, plus an additional shares of our common stock, will be offered in a public offering on a best efforts basis by and , as our underwriters and subscription agent, at a price currently anticipated to be between $ and $ per share. If the public offering price exceeds $ per share, subscribers for shares in this rights offering will not pay more than $ per share. If the public offering price is less than $ per share, at the closing of the offering we will release from escrow and deliver to the rights offering subscribers that portion of the subscription price equal to the difference between $ and the public offering price, without interest. In accordance with applicable securities laws, we will file with the Securities and Exchange Commission: (i) a supplement to this prospectus once the price of the public offering has been determined to include the public offering price and final rights offering price, and (ii) all marketing materials, as exhibits to the registration statement of which this prospectus is a part or as free writing prospectuses. We are undertaking the offering to improve our capital position and to inject additional capital into our subsidiary bank, Central Virginia Bank, so that we can address our current regulatory capital deficiencies. We will not close the offering unless we believe that the proceeds will satisfy our capital plans, set forth in Use of Proceeds beginning on page 26. However, we cannot guarantee that the amount we raise in the offering will be sufficient to satisfy the current or future regulatory capital requirements that apply to us. It is possible that, if you invest in the offering, you will hold our common stock at a time when we do not meet our regulatory capital requirements, either following this offering or in the future. Any such failure to satisfy regulatory capital requirements could result in significant regulatory actions by our regulators, including the possibility of the regulatory takeover by our state or federal regulators. Our common stock is traded on The Nasdaq Global Market under the ticker symbol CVBK. The last reported sales price of our common stock on November 17, 2011 was $0.85 per share. The shares of common stock issued in the offering will be listed on The Nasdaq Global Market under the same ticker symbol. Investing in our common stock involves risks. See Risk Factors beginning on page 14 to read about factors you should consider before making your investment decision. Subscription Offering Price Proceeds to Us Before Expenses(1) Rights Offering Per Share $ $ Public Offering Per Share $ $ Total $ $ (1) Assumes the sale of all rights offering shares at $ per share and public offering shares at $ per share and the payment to of a financial advisory fee of % of the aggregate sales price. OUR BOARD OF DIRECTORS IS NOT MAKING A RECOMMENDATION REGARDING YOUR EXERCISE OF THE SUBSCRIPTION RIGHTS. You should carefully consider whether to exercise your subscription rights before the rights offering expires. All exercises of subscription rights and all subscriptions in the public offering are irrevocable. Neither the Securities and Exchange Commission nor any state securities commission or other regulatory agency 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. These securities are not savings accounts, deposits or obligations of our bank and are not insured or guaranteed by the Federal Deposit Insurance Corporation s Deposit Insurance Fund or any other governmental agency. The date of this prospectus is , 2011. Use of Proceeds We expect the gross proceeds from the offering to be $ ($ from the rights offering , assuming full participation, and $ from the public offering, assuming full subscription of additional shares). We intend to use the net proceeds we receive from the offering to ensure that the Bank significantly exceeds the well capitalized regulatory capital requirement, to improve the Company s regulatory capital position and for general corporate purposes. (See Use of Proceeds. ) U.S. Federal Income Tax Consequences For U.S. federal income tax purposes, you should not recognize income or loss upon receipt or exercise of a subscription right. You should consult your own tax advisor as to the tax consequences to you of the receipt, exercise or lapse of the subscription rights in light of your particular circumstances. Closing We expect to close the offering on or about , 2011. Extension and Cancellation Although we do not presently intend to do so, we have the option to extend the offering for additional periods ending no later than . Our board of directors may for any reason cancel the offering at any time before the closing. If we cancel the offering, all subscription payments will be returned promptly, without interest or penalty. Dividend Policy Our future dividend policy is subject to the discretion of the board of directors and will depend upon a number of factors, including future consolidated earnings, financial condition, liquidity and capital requirements of the Company and the Bank, applicable governmental regulations and policies and other factors deemed relevant by the board of directors. In view of the current economic conditions and the Company s participation in the TARP Capital Purchase Program, it is unlikely that dividends in the next few years will be in amounts substantially in excess of the most recent dividends paid. In addition, we have entered into a written agreement with the Bureau of Financial Institutions and the Federal Reserve and, as a result, are prohibited from making distributions on our Preferred Stock, interest payments on our trust preferred securities or declaring common dividends without prior approval from the Bureau of Financial Institutions and Federal Reserve. Although we can seek to obtain this prior approval, banking regulators may choose not to grant it, and we would not expect to be granted a waiver or be released from this obligation until our financial performance improves significantly. Our ability to distribute cash dividends will depend primarily on the amount of cash and liquid assets held as well as the ability of the Bank to declare and pay dividends to us. As a state member bank, the Bank is subject to certain restrictions imposed by the reserve and capital requirements of federal and Virginia banking statutes and regulations. Furthermore, neither we nor the Bank may declare or pay a cash dividend on any capital stock if it is insolvent or if the payment of the dividend would render it insolvent or unable to pay its obligations as they become due in the ordinary course of business. We are also subject to certain limitations on our ability to pay dividends as a result of our participation in the TARP Capital Purchase Program. For additional information on these limitations, see Business Regulation and Supervision Payment of Dividends.

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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that a person should consider before investing in the Company s securities. A potential investor should carefully read the entire prospectus, including

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+PROSPECTUS SUMMARY This prospectus summary contains basic information about Capitol 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. You should carefully read this prospectus, including the Risk Factors section, and the information included or incorporated by reference herein, including Capitol s audited consolidated financial statements and the accompanying notes included in Capitol s Annual Report on Form 10-K for the year ended December 31, 2009, before you decide to exercise your subscription rights. Company Information Capitol is a community banking company, with a current network of individual banks and bank operations in 14 states and total consolidated assets which approximated $4.2 billion as of September 30, 2010. Capitol is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, with principal executive offices located at the Capitol Bancorp Center, 200 Washington Square North, Fourth Floor, Lansing, Michigan 48933. Capitol s telephone number is 517-487-6555. Capitol also has executive offices located at 2777 East Camelback Road, Suite 375, Phoenix, Arizona 85016 (telephone number: 602-955-6100). Capitol s operating strategy is to provide transactional, processing and administrative support and mentoring to aid in the effective operation and development of its banks. It provides access to support services and management with significant experience in community banking. These administrative and operational support services do not require a direct interface with the bank customer and therefore can be consolidated more efficiently without affecting the bank customer relationship. Economic conditions throughout the United States, and in the regions in which Capitol and its banking operations are located, have deteriorated to an extent not experienced since the Great Depression of the 1930s. Capitol s operations are focused on community banking and helping small, local businesses meet their financial needs, primarily through making loans to those businesses and their owners, funded by locally-gathered deposits. A substantial portion of those loans are secured by commercial real estate property, as part of the overall collateral to support those individual loans. In this adverse economic environment, small businesses and their owners have suffered significant financial hardships, which preclude repaying loans in accordance with their terms. In addition, recent economic factors have resulted in a variety of stresses impacting depositors and the availability of deposits to fund lending activities. Further, and more importantly, the underlying values of the real estate collateral have plummeted in this sustained adverse environment, resulting in massive loan losses and dramatic growth in levels of nonperforming assets not seen previously in the banking industry in general and, in particular, at Capitol. Prospects of economic recovery are uncertain, unpredictable and subject to variables completely outside the control or influence of financial institutions, including Capitol. Capitol has incurred significant losses from operations in periods since 2007. In addition, Capitol has experienced significant increases in nonperforming loans, foreclosed real estate, loan losses and other materially adverse circumstances including, but not limited to, a very material erosion of its common equity and related regulatory capital levels, resulting in Capitol becoming classified as less than adequately-capitalized from a regulatory perspective. In 2009, Capitol entered into a written agreement with the Federal Reserve Bank of Chicago (its primary federal regulator) which requires Capitol to improve operating results and its overall condition, in addition to refraining from a number of activities without prior written consent from that Federal Reserve Bank. The current less than adequately-capitalized classification of Capitol exposes it to increased regulatory scrutiny and enforcement action and other materially adverse consequences. Because of Capitol s financial condition and recent changes affecting its ability (as well as that of other bank holding companies in the U.S.) to include any portion of trust-preferred securities in regulatory capital computations, only a portion of trust-preferred securities are included in Capitol s current regulatory capital measurements and may not be includable in the future. When such trust-preferred securities were originally issued, and until recently, substantially all of those securities were a crucial element of Capitol s compliance with regulatory capital requirements because they were a very material component of its regulatory capital. Because those securities will no longer qualify for inclusion with other qualifying capital elements for regulatory purposes, Capitol is seeking successful attainment of the requisite consent from the trust-preferred securities holders in a separate consent solicitation, exchange of Capitol s trust-preferred securities for previously unissued common stock of Capitol and The information contained in this prospectus is not complete and may be changed. Capitol 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 Capitol is not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. this rights offering. If Capitol does not obtain the requisite consent from the trust-preferred securities holders to sufficiently complete the exchange of Capitol s trust-preferred securities for previously-unissued shares of Capitol s common stock and adequately complete the rights offering, its ability to continue to operate as a going concern will be jeopardized. Like a large number of financial institutions across the United States, Capitol has been materially impacted by adverse economic conditions. As a result of this economic downturn and depressed real estate markets, Capitol s banking subsidiaries have experienced a decline in the performance of loans, particularly real estate construction and development loans, which has resulted in Capitol incurring a net loss of $195.2 million for the year ended December 31, 2009 and a net loss of $129.6 million for the nine months ended September 30, 2010. If Capitol s banking subsidiaries continue to experience adverse performance in the consolidated loan portfolio, large loan losses and losses associated with foreclosed real estate and, as a result, Capitol continues incurring net losses, some or all of Capitol s banking subsidiaries may be unable to meet or maintain adequate regulatory capital ratios unless Capitol raises additional capital. Furthermore, during this adverse economic environment, analysts and others have focused on additional measures of a financial institution s capital position, such as tangible common equity to tangible assets and regulatory Tier 1 capital as a percentage of risk-weighted assets, to assess the financial health and stability of the institution, which also tends to impact an institution s stock price. As a result of the foregoing considerations, Capitol has been pursuing the execution of a multi-faceted capital strategy to improve Capitol s capital position by increasing common equity as a component of regulatory capital and shareholders equity and reducing Capitol s indebtedness. Capitol believes that successful completion of one or more components of this capital strategy will significantly enhance Capitol s capital position, strengthen the composition of Capitol s capital base by increasing common equity and give Capitol added flexibility to take advantage of potential market opportunities. Capitol s multi-faceted capital strategy currently contemplates three components in addition to this rights offering, which include: (i) the exchange of any or all of the outstanding trust-preferred securities issued by each of Capitol Trust I, Capitol Trust II, Capitol Trust III, Capitol Trust IV, Capitol Trust VI, Capitol Trust VII, Capitol Trust VIII, Capitol Trust IX, Capitol Trust X, Capitol Trust XI and Capitol Trust XII (the TruPS Exchange Offer ) for shares of Capitol s common stock, of which there are approximately $170.8 million aggregate liquidation preference currently outstanding; (ii) the exchange of the outstanding shares issued by each of Capitol Development Bancorp Limited IV, Capitol Development Bancorp Limited V, Capitol Development Bancorp Limited VI, Capitol Development Bancorp Limited VII and Capitol Development Bancorp Limited VIII (the CDBLs Exchange Offer ) for shares of Capitol s common stock; and (iii) a common stock or preferred stock offering if and when market conditions become favorable for such an offering. As of the date of this prospectus, however, except in connection with the TruPS Exchange Offer and the CDBLs Exchange Offer, which commenced on January 3, 2011, Capitol does not have any immediate or definitive plans, understandings, agreements or commitments to issue additional shares of common stock or preferred stock for any purposes. Those three components of Capitol s capital strategy, if executed, will require a significant number of authorized but previously unissued shares of Capitol s common stock. Further, the significant decline in Capitol s stock price in recent months has increased the number of shares that Capitol believes will be necessary to effect Capitol s capital strategy. Accordingly, Capitol is undertaking steps to seek approval, from holders of its common stock, to authorize additional shares of common stock in order to execute each component of Capitol s capital strategy and to take advantage of favorable market opportunities and other opportunities. If such approval is not obtained, Capitol may be unable to complete the rights offering and other transactions including the issuance of previously unissued common stock. In light of the foregoing, Capitol has decided to pursue this rights offering to raise capital which can be used to support Capitol and its banking subsidiaries and improve Capitol s capital position. In addition, Capitol decided to pursue this rights offering to raise additional capital to assist Capitol and its banking subsidiaries in contributing towards achieving compliance with the regulatory capital requirements of the enforcement actions that Capitol and its banking subsidiaries have entered into with their respective banking regulators. For additional information about Capitol s business, see Capitol s annual and quarterly reports, and the other documents Capitol files with the SEC, which are incorporated into this registration statement by reference. See Where You Can Find More Information on page 58. Preliminary and Subject to Completion, dated January __, 2011 PROSPECTUS of Capitol Bancorp Ltd. $[__0,000,000] Subscription Rights to Purchase up to ___0,000,000 Shares of Common Stock at [ ] per Share 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 Description of the Subscription Rights in this prospectus for a more detailed description of the terms and conditions of the rights offering. Basic Subscription Privilege: For each whole right that you own, you will have a basic subscription privilege to buy from Capitol one share of Capitol s common stock at a subscription price of $ [ ] per share. You may exercise your basic subscription privilege for some or all of your rights, or you may choose not to exercise your rights. Each holder of record of Capitol s common stock on _________, 2011, (the Record Date ) will receive ______ right(s) for each share of Capitol s common stock held as of the Record Date. The rights are being distributed to record-holders of Capitol s common stock as of the Record Date on _______, 2011. Oversubscription Privilege: In the event that you purchase all of the shares of Capitol s common stock available to you pursuant to your basic subscription privilege, you may also choose to purchase a portion of any shares of Capitol s common stock that are not purchased by Capitol s other shareholders through the exercise of their basic subscription privileges. If holders exercise their oversubscription privileges for more shares than are available to be purchased pursuant to the oversubscription privileges, Capitol would either increase the size of the offering or allocate the shares of Capitol s common stock to be issued pursuant to the exercise of oversubscription privileges pro rata among those over-subscribing rights holders. Pro rata means in proportion to the number of shares of Capitol s common stock that you and the other subscription rights holders have agreed to purchase by exercising your basic subscription privileges. If you are not allocated the full amount of shares for which you oversubscribe, you will receive a refund of the subscription price, without interest or penalty, that you delivered for those shares of Capitol s common stock that are not allocated to you. The subscription agent will mail such refunds as soon as practicable after the completion of the offering. Extended Oversubscription Privilege: In the event that any shareholders fail to exercise their oversubscription privilege as of the expiration of the rights offering, Capitol may, at Capitol s discretion, extend the rights offering for a limited time period to allow those shareholders who did exercise their oversubscription privilege to purchase additional shares of Capitol s common stock. Capitol may extend the rights offering as many times as Capitol deems necessary to complete the offering. Subscription Price: $ [ ] per share of common stock, payable in cash, which represents the average of the closing sales prices of Capitol s common stock for the 10 trading days ended on [ ], 2011, less a [ ]% discount. To be effective, any payment related to the exercise of a right must clear prior to the expiration of the rights offering. Record Date: 5:00 p.m., Eastern Time, on [ ], 2011. Expiration of the Rights Offering: 5:00 p.m., Eastern Time, on [ ], 2011, unless the expiration date is extended. Capitol reserves the right to extend the rights offering at Capitol s sole discretion. Capitol Bancorp Ltd., a Michigan corporation ( Capitol ), is distributing, at no charge, to holders of Capitol s common stock, nontransferable subscription rights to purchase up to ___0,000,000 shares of Capitol s common stock. You will receive approximately [ ] of a subscription right for each share of common stock owned at 5:00 p.m., Eastern Time, on [ ], 2011. Each whole subscription right will entitle you to purchase one share of Capitol s common stock at a subscription price of [ ] per share of common stock, which Capitol refers to as the basic subscription privilege. The per share price was determined by Capitol s board of directors and represents the average of the closing sales prices of Capitol s common stock for the 10 trading days ended on [ ], 2011, less a [ ]% discount. Subscription rights may only be exercised in whole numbers; Capitol will not issue fractional shares and will round all of the subscription rights down to the nearest whole number. If you fully exercise your basic subscription privilege and other shareholders do not fully exercise their basic subscription privileges, you will be entitled to exercise an oversubscription privilege to purchase a portion of the unsubscribed shares of Capitol s common stock at the same subscription price of $[ ] per share, subject to proration and subject, further, to reduction by Capitol under certain circumstances. To the extent you properly exercise your oversubscription privilege for an amount of shares that exceeds the number of the unsubscribed shares available to you, any excess subscription payments received by the subscription agent will be returned, without interest or penalty, as soon as practicable. The subscription rights will expire if they are not exercised by 5:00 p.m., Eastern Time, on [ ], 2011, unless Capitol extends the rights offering period in Capitol s sole discretion. If any subscription rights (including any oversubscriptions) remain unexercised after the expiration of the rights offering, they will expire and have no value. You should carefully consider whether to exercise your subscription rights prior to the expiration of the rights offering. All exercises of subscription rights are irrevocable. Capitol s board of directors is not making a recommendation regarding your exercise of the subscription rights. The subscription rights may not be sold, transferred or assigned and will not be listed for trading on any stock exchange or market or on the NYSE. Your participation in this rights offering is very important to enable Capitol to enhance its overall capital position, improve its capital base by increasing common equity, thereby increasing capital to aid in meeting regulatory requirements and provide Capitol with added flexibility to take advantage of market opportunities and implement its operating strategy. This is not an underwritten offering. Shares of Capitol s common stock are being offered directly by Capitol without the services of an underwriter or selling agent. Capitol has engaged _____________ to serve as the subscription agent for the rights offering. The subscription agent will hold in escrow the funds received from subscribers until Capitol completes or cancels the rights offering. For further information about this offering please contact Capitol s Corporate President, Cristin K. Reid at: Capitol Bancorp Ltd., Capitol Bancorp Center, 200 Washington Square North, Fourth Floor, Lansing, Michigan 48933, or by telephone at 517-487-6555. Use of Proceeds: Capitol intends to use the proceeds of the rights offering to improve the capital position of Capitol and some of its banking subsidiaries. Non-Transferability of Rights: The subscription rights may not be sold, transferred or assigned and will not be listed for trading on the NYSE or on any stock exchange or trading market. No Board Recommendation: Capitol s 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 Capitol s business and the rights offering. See Risk Factors for a discussion of some of the risks involved in investing in Capitol s common stock. No Revocation: All exercises of subscription rights are irrevocable, even if you later learn information about Capitol that you consider to be unfavorable. You should not exercise your subscription rights unless you are certain that you wish to purchase additional shares of Capitol s common stock offered pursuant to this rights offering. Federal Income Tax Considerations: The receipt and exercise of subscription rights pursuant to the basic subscription privilege or subscription for shares pursuant to the oversubscription privilege will generally not be taxable for U.S. federal income tax purposes. You should, however, seek specific tax advice from your tax advisor in light of your particular circumstances and as to the applicability and effect of any other tax laws. See Material U.S. Federal Income Tax Treatment of Rights Distribution. Extension, Cancellation and Amendment: Capitol has the option to extend the rights offering and the period for exercising your subscription rights for a period or successive periods, although Capitol does not presently intend to do so. Capitol s 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, all subscription payments received by the subscription agent will be returned, without interest or penalty, as soon as practicable. Capitol also reserves the right to amend or modify the terms of the rights offering, including increasing the size of the offering, as appropriate. Procedures for Exercising Rights: To exercise your subscription rights, you must take the following steps: If you are a registered holder of Capitol s common stock, you may deliver payment and a properly completed rights certificate to the subscription agent, ____________, before 5:00 p.m., Eastern Time, on [ ], 2011, unless the expiration date is extended. You may deliver the documents and payments by mail or overnight courier. If regular mail is used for this purpose, Capitol recommends using registered mail, properly insured, with return receipt requested. If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank or other nominee, or if you would rather an institution conduct the transaction on your behalf, you should instruct your broker, dealer, custodian bank or other nominee to exercise your subscription rights on your behalf and deliver all documents and payments before 5:00 p.m., Eastern Time, on [ ], 2011. If you wish to purchase shares of Capitol s common stock through the rights offering, please promptly contact your broker, dealer, custodian bank or other nominee as record holder of your shares. Capitol will ask your record holder to notify you of the rights offering. You should complete and return to your record holder the form entitled Beneficial Owner Election Form. Capitol s 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 the rights offering is cancelled, the subscription agent will return all subscription payments it has received, without interest or penalty, as soon as practicable. Shares of Capitol s common stock are traded on the New York Stock Exchange, Inc. (the NYSE ) under the symbol CBC. On [ ], 2011, the closing sale price for Capitol s common stock was $[ ] per share. Capitol currently intends to list the shares of common stock issued in the rights offering on the NYSE under the same symbol, but no guaranty can be made that Capitol will continue to meet the listing requirements of the NYSE in the future. Following the effectiveness of this prospectus, Capitol reserves the right to negotiate and enter into standby purchase agreements with certain institutional investors and high-net-worth individuals, or standby purchasers, pursuant to which purchasers may agree to acquire from Capitol, at the same subscription price offered to holders of its common stock, any shares of Capitol s common stock not subscribed for in the rights offering. Capitol may offer any such unsubscribed shares, after taking into account all oversubscription rights exercised and any shares sold to standby purchasers, if any, at the expiration of the rights offering to the public at $[ ] per share. Any offering of shares of common stock that remain unsubscribed will be on a best efforts basis by Capitol s officers and directors. Any public offering of unsubscribed shares of common stock will terminate on [ ], 2011, unless extended or terminated by Capitol. The exercise of your subscription rights for shares of Capitol s common stock involves risks. See Risk Factors beginning on page 17 of this prospectus and the documents incorporated by reference in this prospectus to read about important factors you should consider before exercising your subscription rights. Neither the U.S. Securities and Exchange Commission (the SEC ) 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. These securities are not savings accounts, deposits or other obligations of any bank and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. The date of this prospectus is [ ], 2011. [The remainder of this page intentionally left blank] Issuance of Common Stock: If you purchase shares of common stock through the rights offering, Capitol will issue those shares to you as soon as practicable after the completion of the rights offering. Shares Outstanding Before the Rights Offering: [ ] shares of Capitol s common stock were outstanding as of [ ], 2011. Shares Outstanding After Completion of the Rights Offering: Assuming no stock options or outstanding warrants for the purchase of Capitol s common stock are exercised prior to the expiration of the rights offering and the full $ [ ] million is subscribed for, Capitol expects that approximately [ ] shares of Capitol s common stock will be outstanding immediately after completion of the rights offering. Capitol reserves the right to increase the size of the offering, which would increase the number of shares outstanding. Public Offering: If shares of Capitol s common stock remain available for sale after the closing of the rights offering, Capitol may offer and sell those shares to the public on a best efforts basis at the $[ ] per share subscription price. Subscription Agent: _______________________. Fees and Expenses: Capitol will pay the fees and all of Capitol s expenses related to the rights offering. Trading Symbol: Shares of Capitol s common stock are traded on the NYSE under the symbol CBC. Additional Information: For additional information, please see the description of this offering contained in the sections of this prospectus captioned Incorporation of Certain Information by Reference and Where You Can Find More Information or contact Capitol s Corporate President, Cristin K. Reid at: Capitol Bancorp Ltd., Capitol Bancorp Center, 200 Washington Square North, Fourth Floor, Lansing, Michigan 48933, or by telephone at 517-487-6555. [The remainder of this page intentionally left blank]

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+PROSPECTUS SUMMARY This summary highlights certain information appearing elsewhere or incorporated by reference in this prospectus. For a more complete understanding of this offering, you should carefully read the entire prospectus, the registration statement of which this prospectus is a part and the information incorporated by reference in this prospectus, including the risk factors, the financial statements and the notes thereto. Unless the context indicates otherwise, all references to we, us, our and Company in this prospectus include the Company and the Bank, on a consolidated basis. All references to year refer to our fiscal year, which ends September 30. About our Company First ULB Corp. ( Company ) was incorporated in California on October 17, 1990 and is a thrift holding company headquartered in Oakland, California. The Company is the parent of United Labor Bank, F.S.B. ( Bank ). Our Company s principal business consists of managing its investment in the Bank, which is our wholly owned subsidiary. Our Company also owns First ULB Trust I, a Delaware statutory business trust formed during the fourth quarter of 2004, which has for its sole purpose the issuance of trust preferred securities. About our Bank Our Bank was incorporated and opened for business on May 4, 1990 as a federally chartered stock savings bank. Our Bank engages in substantially all the business operations customarily conducted by independent community banks in California, such as accepting deposits into checking and various types of deposit accounts, offering a full range of real estate, commercial and other installment and term loans and providing other customary banking services. Our Bank s deposits are insured by the Federal Deposit Insurance Corporation ( FDIC ) up to the maximum legal limits and we are a member of the Federal Home Loan Bank of San Francisco ( FHLB-SF ). See DESCRIPTION OF BUSINESS. Our objective is to be a superior performing bank serving the needs of the communities in which we operate by expanding our branch network. Market areas We are a community-oriented financial institution which primarily originates real estate loans within our market areas. Our deposit gathering and lending efforts are focused primarily in the San Francisco Bay Area, the Los Angeles and Sacramento metropolitan areas of California and Seattle, Washington. Aside from our principal office and branch location in Oakland, we maintain branches in San Francisco, San Jose, Sacramento, Long Beach, Glendale, San Diego and Seattle. In the third quarter of 2011, our Bank added a Small Business Loan Department, headquartered in Los Angeles. Growth strategies We primarily market our products and services to small and medium-sized businesses and to retail consumers. Our strategy is to provide service through our employees, who are relationship-oriented and committed to our customers. Through this strategy, we intend to grow our business, expand our customer base and improve our profitability. The key elements of our strategy are to: Utilize the strength of our management team. The experience and market knowledge of our management team is one of our greatest strengths and competitive advantages. Leverage our existing foundation for additional growth. Based on our management s depth of experience and certain infrastructure investments, we believe that we will be able to take advantage of Table of Contents certain economies of scale typically enjoyed by larger organizations to expand our operations both organically and through strategic cost-effective branch or bank acquisitions. We believe that the investments we have made in our data processing, staff and branch network will be able to support a much larger asset base. We are committed, however, to control any additional growth in a manner designed to minimize the risk and to maintain strong capital ratios. We believe that the net proceeds raised in this offering will assist us in implementing our growth strategies by providing the capital necessary to support future asset growth, both organically and through strategic acquisitions. Pursue selective acquisition opportunities. Acquisitions have not been a part of our growth in the past, but we intend to pursue this avenue of growth in the future. We will continue to review branch and whole bank acquisition opportunities, including possible acquisitions of failed financial institutions in FDIC-assisted transactions and will pursue these opportunities if they represent the most efficient use of our capital under the circumstances. We believe that we have the skill set and experience to acquire and integrate successfully both bank and branch acquisitions, and that with the stronger capital positions we expect to have following this offering, we will be well positioned to take advantage of acquisition opportunities as they may arise. We intend to focus on targets in our market areas or other attractive areas with significant core deposits and/or a potential customer base compatible with our growth strategy. Build and maintain customer loyalty through superior service. Our goal at the Bank is to attract labor unions, small to medium-sized businesses and retail consumers in our markets to turn to us first for their banking needs, as a result of our superior personal service and the tailored products and services that we provide. To achieve this goal, we: have a standing credit committee that meets as often as necessary to review completed loan applications, making extensive use of technology to facilitate and expedite our internal communications and thereby enabling us to respond to our customers promptly; and provide Internet business banking at www.laborbank.com which allows our business customers 24-hour Web-based access to their accounts so they can confirm or transfer balances, pay bills, download statements and use our cash management services. Maintain local decision making and accountability. We believe that we have a competitive advantage over larger national and regional financial institutions by providing superior customer service with experienced, knowledgeable management, localized decision making capabilities and prompt credit decisions. We believe that our customers want to deal directly with the individuals who make the credit decisions. Focus on asset quality and strong underwriting. We consider asset quality to be of primary importance and have taken measures in an effort to ensure that, despite the growth in our loan portfolio, we consistently maintain strong asset quality. As of June 30, 2011, we had $4.9 million in nonperforming assets, which as a percentage to total assets, was 1.79%. We also seek to maintain a prudent allowance for loan losses. The ratio of our allowance for loan losses to total loans as of June 30, 2011 was 1.39%. Maintain and grow a stable core deposit base. We intend to continue to grow a stable core deposit (NOW, demand, money market and passbook accounts) base of customers. To the extent that our asset growth outpaces this local deposit funding source, we plan to borrow and raise deposits in the national market using deposit intermediaries. We intend to continue our practice of developing a deposit relationship with each of our loan customers. As of June 30, 2011, the aggregate amount of our NOW, demand, money market and passbook accounts, was $185 million, or 77% of our total deposits and our time deposits were $55 million or 23% of our total deposits. Table of Contents Corporate information Our principal executive offices are located at 100 Hegenberger Road, Oakland, California 94621. Our telephone number is 1-800-734-6888. Our website is www.laborbank.com. Information on our website www.laborbank.com is not incorporated by reference and is not a part of this prospectus. The offering Common stock offered shares Common stock to be outstanding immediately after this offering shares Use of proceeds We intend to use these net proceeds to provide capital to our Bank to support its anticipated organic growth, to support potential future acquisitions of branches or whole banks, including the possible acquisitions of failed financial institutions in FDIC-assisted transactions and for other general corporate purposes. See Use of Proceeds. Dividend policy We have not historically declared or paid dividends on our common stock and we do not expect to do so in the foreseeable future. Any future determination relating to dividend policy will be at the discretion of our Board of Directors ( Board ) and will depend on a number of factors, including our earnings and financial condition, liquidity and capital requirements, the general economic and regulatory climate, our ability to service any equity or debt obligations senior to the common stock, state and federal banking law requirements and other factors deemed relevant by our Board. See Dividend Policy.

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+PROSPECTUS SUMMARY This summary highlights some important information from this prospectus, and it may not contain all of the information that is important to you. You should read the following summary together with the more detailed information regarding us and our common stock being sold in this offering, including Risk Factors and our financial statements and related notes, included elsewhere in this prospectus. Our Company Quadrant 4 Systems Corporation is a Florida corporation. Our primary focus and business model relate to providing business process consulting and information technology, which we refer to as IT, consulting to other businesses. We are a provider of software development, outsourcing and consulting services. In May 2010, we acquired a business involving IT consulting and that area of business is the primary focus of our business model. Our current customer base is primarily medium to large companies primarily in three market segments; healthcare, telecommunications and financial services. Corporate information Our principal executive offices are located at 2850 Golf Road, Suite 405, Rolling Meadows, IL 60010 and our telephone number is (732) 798-3000. Our website address is www.quadrantfour.com. The information contained therein or connected thereto shall not be deemed to be incorporated into this prospectus or the registration statement of which it forms a part. Business Strategy We are a supplier of IT and IT Enabled Services, which we refer to as ITES, based products and solutions specific to the health care, telecommunications and financial services industries. We have adopted a business strategy to acquire, build and deploy a broad range of products and solutions and be a single source one stop supplier of advanced IT solutions that allows our clients to take advantage of recent trends in the information technology field. Table of Contents ABOUT THIS PROSPECTUS You should only rely on the information contained in this prospectus. We have not authorized anyone to give any information or make any representation about this offering that differs from, or adds to, the information in this prospectus or in its documents that are publicly filed with the SEC. Therefore, if anyone does give you different or additional information, you should not rely on it. The delivery of this prospectus does not mean that there have not been any changes in our condition since the date of this prospectus. If you are in a jurisdiction where it is unlawful to offer the securities offered by this prospectus, or if you are a person to whom it is unlawful to direct such activities, then the offer presented by this prospectus does not extend to you. This prospectus speaks only as of its date except where it indicates that another date applies. Market data and certain industry forecasts used in this prospectus were obtained from market research, publicly available information and industry publications. We believe that these sources are generally reliable, but the accuracy and completeness of such information is not guaranteed. We have not independently verified this information, and we do not make any representation as to the accuracy of such information. In this prospectus, the terms we , us , our , our company and Quadrant 4 Systems refer to Quadrant 4 Systems Corporation, a Florida corporation. The trademarks and product names appearing in this prospectus are the property of their respective owners. Table of Contents

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+S-1/A 1 v59450a1sv1za.htm FORM S-1/A sv1za Table of Contents As filed with the Securities and Exchange Commission on July 28, 2011 Registration No. 333-174162 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 1 to Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 GLACIER WATER SERVICES, INC. (Exact name of registrant as specified in its charter) Delaware 5960 33-0493559 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 1385 Park Center Drive Vista, California 92081 (760) 560-1111 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Brian H. McInerney President and Chief Executive Officer Glacier Water Services, Inc. 1385 Park Center Drive Vista, California 92081 (760) 560-1111 (Name, address, including zip code, and telephone number, including area code, of agent for service) Please send copies of all communications to: Howard Hart Weissmann Wolff Bergman Coleman Grodin Evall LLP 9665 Wilshire Boulevard, Suite 900 Beverly Hills, CA 90212 (310) 858-7888 Robert Verigan Sidley Austin LLP One South Dearborn Chicago, IL 60603 (312) 853-7000 Approximate date of commencement of proposed sale to the public: As soon 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, 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 (Do not check if a 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, as amended, 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 SUMMARY This summary highlights information about our Company and this offering contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and financial statements included elsewhere in this prospectus. You should read this entire prospectus carefully, including

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+This summary highlights information contained elsewhere in this Prospectus and may not contain all of the information that may be important to you. For a more complete understanding of our business and the spin-off, you should read this summary together with the more detailed information and financial statements appearing elsewhere in this Prospectus. You should read this entire Prospectus carefully, including the Risk Factors and Cautionary Statement Concerning Forward-Looking Statements sections. Orchard, the Company, we, our, and us refer to Orchard Supply Hardware Stores Corporation and our subsidiaries. Our Company We are a California specialty retailer primarily focused on the consumer segment of the home improvement market. Our stores are designed to appeal to convenience-oriented customers, whose purchase occasions are largely driven by their home repair, maintenance and improvement needs throughout the home, garden and outdoor living areas. As of July 30, 2011, we operated 89 full-service hardware stores in California. We opened four new stores in California within the past three years one in 2010, two in 2009, and one in 2008. Our stores average approximately 43,600 square feet of enclosed space, plus approximately 8,300 square feet of nursery and garden area. Our stores carry a broad assortment of repair and maintenance, lawn and garden and in-home products. We strive to provide our customers with best-in-class customer service by staffing our stores with knowledgeable managers and employees. We design our stores to be easy to shop in, by using high visibility signage for ease of navigation and lower profile shelving than is typically found in our larger warehouse home center competitors. We operate in one reportable segment and provide a merchandise mix which consists of various product categories. Our repair and maintenance category consists of plumbing, electrical, paint, tools, hardware, and industrial products. Our lawn and garden category consists of nursery, garden, outdoor power and seasonal products. Our in-home category consists mainly of our housewares and appliances products. We also focus on the convenience-oriented purchases of the small professional customer. The professional customer s convenience-oriented purchases are largely motivated by a need for incremental supplies and tools to complete construction projects. Recent Developments On October 24, 2011, a subsidiary of the Company entered into a Purchase and Sale Agreement pursuant to which a subsidiary of the Company sold for $21.3 million, all of its interest in its distribution center located in Tracy, California, which is comprised of a building containing approximately 458,000 square feet and the underlying land. In connection with the closing of the sale of the distribution center, a subsidiary of the Company entered into a lease agreement with respect to the distribution center. The commencement date of the lease was October 28, 2011. The lease is a 20-year lease and provides for three five-year extension options. The initial base rent under the lease is $1.7 million per year with 10% increases every five years. The Company will record a loss in the amount of approximately $14 million on the sale of the distribution center in the third quarter of fiscal 2011. Set forth below is our preliminary financial data for the 13 week period ended October 29, 2011 compared to the 13 week period ended October 30, 2010. Our independent registered public accounting firm has not completed its review with respect to our preliminary financial data. Table of Contents EXPLANATORY NOTE This Registration Statement has been prepared on a prospective basis on the assumption that, among other things, the spin-off of the Registrant from Sears Holdings (as described in the Prospectus which is a part of this Registration Statement) and the related transactions and approvals contemplated to occur prior to or contemporaneously with the spin-off will be consummated as contemplated by the Prospectus. There can be no assurance, however, that any or all of such transactions will occur or will occur as so contemplated. Any significant modifications to or variations in the transactions contemplated will be reflected in an amendment or supplement to this Registration Statement. Table of Contents We expect that, for the 13 week period ended October 29, 2011 compared to the 13 week period ended October 30, 2010, our results will be: For the third quarter of fiscal 2011, net sales were $158.7 million, an increase of $4.2 million, or 2.7% as compared to net sales of $154.5 million for the third quarter of fiscal 2010. The increase in net sales was driven primarily by increased demand for seasonal products. Additionally, net sales were positively impacted by the relocation of an existing store. Comparable store sales increased by 1.5%, which was driven by an increase of 4.8% in average ticket comparables offset by a decline in comparable transaction volume of 3.3% for the third quarter of fiscal 2011, as compared to the third quarter of fiscal 2010. Gross margin of $51.5 million, or 32.5% of net sales, for the third quarter of fiscal 2011, as compared to $51.7 million, or 33.5% of net sales, for the third quarter of fiscal 2010. The decrease in gross margin was primarily due to an increase in occupancy costs and inventory shrink costs. Merchandise inventory was $161.2 million at the end of the third quarter of fiscal 2011, a decrease of $4.2 million, or 2.5% as compared to merchandise inventory of $165.4 million at the end of the third quarter of fiscal 2010. Selling and administrative expenses were $55.1 million for the third quarter of fiscal 2011, an increase of $14.8 million, or 36.7 % as compared to selling and administrative costs of $40.3 million for the third quarter of fiscal 2010. The increase in selling and administrative costs was primarily due to a non-cash loss of $14.3 million on the sale and leaseback of our distribution center located in Tracy, California. In addition, the Company incurred additional spending on strategic initiatives and transition costs, offset by a $1.6 million legal benefit as a result of a settlement in the case of Save Mart Supermarkets v. Orchard Supply Hardware LLC. For further information on the case, see note 5 to the interim condensed consolidated financial statements. Depreciation and amortization expense was $7.7 million for the third quarter of fiscal 2011, as compared to $7.8 million for the third quarter of fiscal 2010. The slight decrease of $0.1 million of depreciation and amortization expense was primarily due to an increase in fully depreciated assets. Interest expense was $5.7 million for the third quarter of fiscal 2011, as compared to $4.3 million for the third quarter of fiscal 2010. The increase in interest expense was primarily due to the increase in our applicable interest rate spreads as a result of the amendment of both our Senior Secured Term Loan and our new Real Estate Secured Term Loan. Income tax benefit was $7.0 million for the third quarter of fiscal 2011, as compared to $0.3 million for the third quarter of fiscal 2010. The effective tax rate was 40.8% in the third quarter of fiscal 2011 and 39.0% in the third quarter of fiscal 2010. The change in our effective tax rate was primarily due to differences in tax credits applicable year over year. Net loss was $10.1 million for the third quarter of fiscal 2011, as compared to $0.4 million for the third quarter of fiscal 2010. Adjusted EBITDA, as defined below, was $9.3 million for the third quarter of fiscal 2011, as compared to $11.7 million for the third quarter of fiscal 2010. The decrease in Adjusted EBITDA was primarily due to the increased spending on strategic initiatives and transition costs. We believe that we were in compliance with the Senior Secured Term Loan covenants, including the maximum leverage ratio of 5.50 to 1.00. Our leverage ratio was 5.02 at October 29, 2011. Adjusted EBITDA In addition to our net income (loss) determined in accordance with GAAP, for purposes of evaluating operating performance, we use an Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ( Adjusted EBITDA ), which is adjusted to exclude certain significant items as set forth below. Our management uses Adjusted EBITDA to evaluate the operating performance of our business, as well as executive compensation metrics, for comparable periods. Adjusted EBITDA should not be used by investors Table of Contents The information in this Preliminary Prospectus is not complete and may be changed. We may not issue these securities 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. SUBJECT TO COMPLETION DATED DECEMBER 9, 2011 PROSPECTUS Orchard Supply Hardware Stores Corporation Shares of Class A Common Stock, Par Value $0.01 Per Share Shares of Series A Preferred Stock, Par Value $0.00001 Per Share This Prospectus is being furnished to you as a shareholder of Sears Holdings Corporation ( Sears Holdings ) in connection with the planned distribution (the Distribution or the spin-off ) by Sears Holdings to its shareholders of all the shares of Class A Common Stock, par value $0.01 per share (the Class A Common Stock ), and Series A Preferred Stock, par value $0.00001 per share (the Preferred Stock ), of Orchard Supply Hardware Stores Corporation ( Orchard ) held by Sears Holdings immediately prior to the spin-off. Immediately prior to the time of the Distribution, Sears Holdings will hold all of Orchard s outstanding shares of Class A Common Stock and Preferred Stock. At the time of the Distribution, Orchard s outstanding capital stock will be composed of the following classes of capital stock, each of which is described in greater detail in the Description of Our Capital Stock section of this Prospectus: Class A Common Stock, which is being distributed in the spin-off, will represent approximately 80% of the general voting power of Orchard s outstanding capital stock, and will entitle holders thereof to one vote per share; Orchard s Class B Common Stock, par value $0.01 per share (the Class B Common Stock ), will represent less than 0.5% of the general voting power of Orchard s outstanding capital stock, and will entitle holders thereof to one-tenth of one vote per share; Orchard s Class C Common Stock, par value $0.01 per share (the Class C Common Stock ), will represent approximately 20% of the general voting power of Orchard s outstanding capital stock, and will entitle holders thereof to one vote per share; and Preferred Stock, which is being distributed in the spin-off, will represent 100% of Orchard s outstanding nonvoting capital stock. At the time of the Distribution, Sears Holdings will distribute all of the outstanding shares of Class A Common Stock and Preferred Stock on a pro rata basis to holders of Sears Holdings common stock. Every 22.141777 shares of Sears Holdings common stock outstanding as of the close of business on December 16, 2011, the record date for the spin-off (the record date ), will entitle the holder thereof to receive one share of Class A Common Stock and one share of Preferred Stock, except that holders of unvested shares of restricted stock of Sears Holdings will receive cash in lieu of shares. The Distribution will be made in book-entry form. Fractional shares of Class A Common Stock or Preferred Stock will not be distributed. Instead, the distribution agent will aggregate fractional shares of the Class A Common Stock and the Preferred Stock into whole shares of each security, sell such whole shares in the open market at prevailing rates and distribute the net cash from proceeds from the sales pro rata to each holder who would otherwise have been entitled to receive fractional shares in the Distribution. We expect that the spin-off will be tax-free to Sears Holdings shareholders for U.S. federal income tax purposes, except for any cash received in lieu of fractional shares. The Distribution will be effective as of 11:59 p.m., New York City Time on December 30, 2011, which we refer to hereinafter as the distribution date. Immediately after the Distribution is completed, we will be a publicly traded company independent from Sears Holdings. From and after the Distribution, certificates representing Sears Holdings common stock will continue to represent Sears Holdings common stock, which at that point will include the remaining businesses of Sears Holdings. No action will be required of you to receive shares of Class A Common Stock and Preferred Stock, which means that: no vote of Sears Holdings shareholders is required in connection with this Distribution and we are not asking you for a proxy and you are requested not to send us a proxy; you will not be required to pay for the shares of our Class A Common Stock and Preferred Stock that you receive in the Distribution; and you do not need to surrender or exchange any of your Sears Holdings shares in order to receive shares of our Class A Common Stock and Preferred Stock, or take any other action in connection with the spin-off. There is currently no trading market for our Class A Common Stock or Preferred Stock. We intend to list our Class A Common Stock on the NASDAQ Capital Market under the symbol OSH and to quote our Preferred Stock on the OTCQB, and expect that trading for both will begin the first trading day after the completion of the Distribution. We do not plan to have a when-issued market for our Class A Common Stock or Preferred Stock prior to the Distribution. All share and per share information relating to our capital stock in this prospectus reflects the 6 to 1 stock split, which became effective on December 8, 2011. In reviewing this Prospectus, you should carefully consider the matters described under Risk Factors beginning on page 22 for a discussion of certain factors that should be considered by recipients of our Class A Common Stock and Preferred 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 does not constitute an offer to sell or the solicitation of an offer to buy any securities. The date of this Prospectus is , 2011. Table of Contents or other third parties as the sole basis for formulating investment decisions as it excludes a number of important cash and non-cash recurring items. The Adjusted EBITDA should not be considered as a substitute for GAAP measurements. While Adjusted EBITDA is a non-GAAP measurement, management believes that it is an important indicator of operating performance because: Adjusted EBITDA excludes the effects of financing and investing activities by eliminating the effects of interest and depreciation costs; Management considers gain/(loss) on the sale of assets and impairment to result from investing decisions rather than ongoing operations; and Other significant items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects comparability of results. Adjusted EBITDA was determined as follows: (in thousands) 13 Weeks Ended October 29, 2011 October 30, 2010 Net loss $ (10,108 ) $ (430 ) Interest expense, net 5,725 4,315 Income tax benefit (6,971 ) (275 ) Depreciation and amortization 7,722 7,801 Loss on disposal, sale and impairment of assets 14,418 95 Stock-based compensation 59 157 Other significant items (1,507 ) Adjusted EBITDA $ 9,338 $ 11,663 The Adjusted EBITDA is not the same as the EBITDA as defined in our Senior Secured Term Loan. Other significant items include certain reserves and charges not in the normal course of our operations periodically affecting the comparability of our results. The Company recorded a $0.1 million severance charge in the third quarter of fiscal 2011 due to changes in our management structure. In the third quarter of fiscal 2011, we entered into a Settlement Agreement with Save Mart and recorded a $1.6 million legal benefit. Our Competitive Strengths Our success depends on our ability to remain competitive with respect to our stores shopping convenience, the in-stock availability of merchandise and superior customer service by knowledgeable sales professionals. We believe that our competitive strengths are the following: Our Stores Carry a Wide Variety of Merchandise. We offer our customers a broad selection of products, including well-known consumer brand names, and we strive to offer high in-stock levels. A typical Orchard store offers a selection of repair and maintenance products comparable to larger warehouse competitors and carries more products than the typical smaller independent hardware store. Each of our stores offers a wide selection of well-known consumer brand names, such as 3M, Ames/Tru-Temper Tools, Black & Decker, Craftsman, DeWalt, Dickies, Dutch Boy, General Electric, Leviton, Makita, Milwaukee, Miracle-Gro, Moen, Quikrete, RainBird, Rubbermaid, Scotts, Stanley, Toro and Weber. Our private Table of Contents label brands typically generate higher gross profit margins than third-party brands and include Aqua Vista, Bridgewater Orchard, OSH, Pacific Bay and Western Hawk; these private label brands also add to the distinctive nature of our product selection. In addition, we believe that our year-round garden and nursery categories are key in drawing customers to our stores and will provide a platform for our growth. While we believe that participating in these categories better positions us to successfully compete against the larger warehouse home centers, it also acts as a competitive advantage over smaller independent retailers that typically do not carry the same breadth of assortment as we do in this category. We believe that our lifetime plant guarantee policy also drives customer loyalty. We Stock High Margin Product Categories. While our stores offer a wide range of merchandise, in contrast to our larger warehouse home center competitors, we stock repair and maintenance products, not construction materials that typically yield lower gross margins and require substantial selling space. Our limited offerings in these areas allow us to dedicate valuable selling space to higher-margin items that meet the needs of our convenience-oriented customers. Our Stores Are Easy to Navigate and Convenient to Shop. To facilitate the shopping experience, our stores are generally designed in a conventional format using lower profile shelving and higher visibility signage than is usually found in our larger warehouse home center competitors that are typified by warehouse racking and over-stacked aisles. Customers can generally view the majority of our store upon entering, helping them to easily and quickly locate items. Related departments are generally located adjacent to each other, and most merchandise is displayed according to centrally developed floor plans that are designed to optimize space utilization. Product labels and descriptive signage assist customers in easily identifying merchandise. In addition, we strive to select store sites that are easily accessible, conveniently located and have ample parking capacity. These features are intended to provide customers with a comfortable and convenient shopping environment. We Strive to Deliver Outstanding Customer Service and Value Added Services. We believe that our customers associate us with providing outstanding customer service and attractive value added services. We drive customer loyalty by striving to deliver outstanding customer service, a broad selection of products and high in-stock levels through friendly, experienced and knowledgeable sales people and store managers. Many of our in-store personnel have repair experience and our associates pass written tests on store policies and products in their respective departments. In addition, we offer repair services on gas outdoor power products through our Eager Beaver Engine House, which we believe distinguishes us from many of our competitors. We also provide pickup and delivery services. We Have an Experienced Management Team and Store Leadership. We have recruited an experienced executive management team with the objective of increasing our profitability and stimulating our growth. Our executive management team has an average of over 18 years of retail related experience and an average of 8 years in the home improvement industry. Our executive management is supported by what we believe is one of the more stable and experienced groups of store-level managers in the industry. The average tenure of an Orchard store manager is approximately 15 years. In addition, we believe that we have a pool of highly qualified assistant store managers who are Table of Contents experienced and ready to become store managers as we continue to expand. The average tenure for an assistant store manager with Orchard is approximately 10 years. Our stores are generally open seven days per week. Depending on the size and sales volume of the store, the total number of personnel assigned to a particular store varies from about 35 to 105, approximately 10 to 35 of whom are full-time employees. Our stores are operated by store managers, who report to one of eight district managers. Our store managers are responsible for day-to-day store operations, subject to operating procedures established at our store support center. A typical store is staffed with a store manager, two assistant managers and seven department leads. Our Capital Stock At the time of the spin-off, Orchard s outstanding capital stock will be composed of the following classes of capital stock: Class A Common Stock, Class B Common Stock, Class C Common Stock and Preferred Stock. Class A Common Stock. Class A Common Stock, all the outstanding shares of which will be held by Sears Holdings immediately prior to the spin-off, is being distributed in the spin-off and will represent approximately 80% of the general voting power of Orchard s outstanding capital stock. Holders of Class A Common Stock will be entitled to one vote per share. With respect to the election of our directors, the holders of Class A Common Stock will vote as a separate class and be entitled to elect eight members of our ten member board of directors, subject to adjustment based on ACOF I LLC s ownership of our capital stock as more fully described in the Description of Our Capital Stock section of this Prospectus. The Class A Common Stock is presently held by a subsidiary of Sears Holdings and by ACOF I LLC ( ACOF ); ACOF will exchange its shares of Class A Common Stock for shares of Class C Common Stock immediately prior to the spin-off, such that immediately following the spin-off, the Class A Common Stock will be 100% held by Sears Holdings shareholders. Class B Common Stock. Class B Common Stock is not being distributed in the spin-off and will represent less than 0.5% of the general voting power of Orchard s outstanding capital stock. Holders of Class B Common Stock will be entitled to one-tenth of one vote per share. With respect to the election of our directors, the holders of Class B Common Stock will vote together with holders of Class C Common Stock as a single class and be entitled to elect two members of our ten member board of directors, subject to adjustment based on ACOF s ownership of our capital stock as more fully described in the Description of Our Capital Stock section of this Prospectus. Our outstanding shares of Class B Common Stock are held by certain former employees of Orchard who acquired such shares of Class B Common Stock in connection with past equity investment programs of Orchard. Our Class B Common Stock is also the class of capital stock underlying options granted to certain employees prior to the date of the spin-off. Class C Common Stock. Class C Common Stock is not being distributed in the spin-off and will represent approximately 20% of the general voting power of Orchard s outstanding capital stock. Holders of Class C Common Stock will be entitled to one vote per share. With respect to the election of our directors, the holders of Class C Common Stock will vote together with holders of Class B Common Stock as a single class and be entitled to elect two members of our ten member board of directors, subject to adjustment based on ACOF s ownership of our capital stock as more fully described in the Description of Our Capital Stock section of this Prospectus. Immediately prior to the spin-off, we will authorize the creation of Class C Common Stock, and all of the Class A Common Stock then owned by ACOF will be exchanged for Class C Common Stock immediately prior to the spin-off, such that ACOF will own 100% of our outstanding Class C Common Stock. Preferred Stock. Preferred Stock, all the outstanding shares of which will be held by Sears Holdings immediately prior to the spin-off, is being distributed in the spin-off and will represent 100% of Table of Contents Orchard s outstanding nonvoting capital stock. The terms of the Preferred Stock do not entitle the holders thereof to any dividends. The terms of the Preferred Stock will provide that dividends and other distributions may not be paid on any shares of our capital stock until all outstanding shares of the Preferred Stock have been repurchased or redeemed unless such dividend or distribution (i) has been unanimously approved by our board of directors, (ii) relates to a poison pill stockholder rights plan or (iii) is a distribution of cash in lieu of fractional shares made in connection with this Distribution. No shares of our capital stock, other than our Preferred Stock, may be redeemed, repurchased or otherwise acquired by us until all outstanding shares of the Preferred Stock have been redeemed or otherwise repurchased unless such redemption or repurchase (i) is made in connection with an employee incentive or benefit plan or other compensatory arrangement, (ii) has been unanimously approved by our board of directors, (iii) relates to a poison pill stockholder rights plan or (iv) is a distribution of cash in lieu of fractional shares made in connection with this Distribution. Risk Factors Our business is subject to various risks, such as those highlighted in the section entitled Risk Factors beginning on page 22 of this Prospectus, including: our ability to offer merchandise and services desirable to our customers and compete effectively in the highly competitive home improvement retail industry; the impact on our revenues of adverse worldwide and Californian economic conditions and, in particular, economic factors that negatively impact the home improvement industry; the adverse effect of extended cold or wet weather in California on our operating results; our ability to obtain suitable replacement financing upon the maturing of our existing financing arrangements; our substantial leveraging, which may place us at a competitive disadvantage in our industry; and our ability to generate the significant amount of cash necessary to service our debt and comply with the terms of our existing financing arrangements. Our Relationship with Sears Holdings We were originally formed as a purchasing cooperative by a group of farmers in California s Santa Clara Valley. We opened for business in March 1931 with a single store in San Jose, California and we were incorporated in Delaware on March 31, 1989. In 1996, we were acquired by Sears, Roebuck and Co. ( Sears Roebuck ), a company that is now a wholly owned subsidiary of Sears Holdings. Sears Holdings is the company that was formed in connection with the merger of Sears Roebuck and Kmart Holding Corporation ( Kmart ) on March 24, 2005, and Sears Holdings is the parent company of Sears Roebuck and Kmart. Following the Distribution, we will be a publicly traded company independent from Sears Holdings, and Sears Holdings will not retain any ownership interest in us. However, we anticipate that immediately following the Distribution, ESL Investments, Inc. and affiliated entities (collectively, ESL ), which currently owns approximately 61% of Sears Holdings common stock, will own approximately 61% of our outstanding Class A Common Stock, representing approximately 61% of Class A Common Stock voting power and approximately 49% of the general voting power of our outstanding capital stock. Following the spin-off, ESL will also own approximately 61% of our outstanding Preferred Stock, which is our outstanding nonvoting capital stock. As a result of ESL holding more than 50% of our voting power for the election of eight of ten directors immediately after the consummation of the Distribution, we may qualify as a controlled company under the Nasdaq Marketplace rules, which would allow us to rely on exemptions from certain corporate governance requirements otherwise applicable to Nasdaq-listed companies. However, we do not currently intend to rely on such exemptions. Immediately following the Table of Contents Distribution, ACOF I LLC ( ACOF ), a wholly owned subsidiary of Ares Corporate Opportunities Fund, L.P. ( ACOF I ), an affiliate of Ares Management LLC ( Ares Management ), will own 100% of our Class C Common Stock, representing approximately 20% of the general voting power of our outstanding capital stock. See Security Ownership by Certain Beneficial Owners and Management in this Prospectus for a more detailed description of the beneficial ownership of our capital stock by certain shareholders following the Distribution. Historically we have had agreements with Sears Holdings subsidiaries to sell certain Sears Holdings proprietary branded products and in preparation for the Distribution we will negotiate and enter into new agreements. In connection with the Distribution, we have entered into or will enter into various agreements with Sears Holdings or certain of its subsidiaries which, among other things, (i) govern the principal transactions relating to the Distribution and certain aspects of our relationship with Sears Holdings following the spin-off, (ii) establish terms under which Sears Holdings will provide us with certain transition services, (iii) establish terms pursuant to which we may sell certain appliances and related protection agreements supplied to us by Sears Holdings on a consignment basis and (iv) establish terms pursuant to which we may acquire and sell certain Sears Holdings proprietary branded merchandise. These agreements were made or will be made in the context of a parent-subsidiary relationship and were or will be negotiated in the overall context of our separation from Sears Holdings. The terms of these agreements may be more or less favorable than those we could have negotiated with unaffiliated third parties. However, these agreements generally incorporate arm s length terms and conditions, including market-based pricing and term of duration. For more information regarding the agreements between us and Sears Holdings or certain of its subsidiaries, see Certain Relationships and Related Party Transactions Agreements with Sears Holdings in this Prospectus. Trademarks and Service Marks We have registered a number of trademarks and service marks in the United States including OSH , ORCHARD SUPPLY HARDWARE , BRIDGEWATER , OSH ORCHARD SUPPLY HARDWARE , WESTERN HAWK and PACIFIC BAY . We also use the following trademarks, some of which are pending registration as intend-to-use applications: ORCHARD SUPPLY HARDWARE EST. 1931 and PACIFIC BAY . All other trademarks or service marks appearing in this Prospectus are the property of their respective owners. Corporate Information We conduct substantially all our operations through our direct, wholly owned subsidiary, Orchard Supply Hardware LLC. Our principal executive offices are located at 6450 Via Del Oro, San Jose, California 95119 and our telephone number is (408) 281-3500. Our website address is www.osh.com. Table of Contents Summary of the Spin-Off The following is a summary of the terms of the spin-off. See The Spin-Off in this Prospectus for a more detailed description of the matters described below. Distributing company Sears Holdings Corporation ( Sears Holdings ) is the distributing company in the spin-off. Immediately following the Distribution, Sears Holdings will not own any capital stock of Orchard Supply Hardware Stores Corporation ( Orchard ). Distributed company Orchard is the distributed company in the spin-off. Primary purposes of the spin-off For the reasons more fully discussed in Questions and Answers About the Company and The Spin-off What are the reasons for the spin-off? , the Sears Holdings board of directors believes that separating Orchard from Sears Holdings is in the best interests of both Sears Holdings and Orchard. Distribution ratio Each holder of Sears Holdings common stock will receive one share of Class A Common Stock and one share of Preferred Stock for every 22.141777 shares of Sears Holdings common stock held on December 16, 2011, the record date for the Distribution. Cash will be distributed in lieu of any fractional shares of Class A Common Stock and Preferred Stock you are otherwise entitled to, as described below. Securities to be distributed All of the shares of Class A Common Stock and Preferred Stock owned by Sears Holdings, which will be 100% of our Class A Common Stock and 100% of our Preferred Stock outstanding immediately prior to the Distribution. The Class A Common Stock will represent approximately 80% of the general voting power of Orchard s outstanding capital stock (subject to the discussion under Description of Our Capital Stock regarding relative rights of our Class A Common Stock, Class B Common Stock and Class C Common Stock to vote for the election of directors) and the outstanding shares of Preferred Stock will represent 100% of Orchard s outstanding nonvoting capital stock. Based on the approximately 106,413,379 shares of Sears Holdings common stock outstanding on December 16, 2011, and applying the distribution ratio of one share of Class A Common Stock and one share of Preferred Stock for every 22.141777 shares of Sears Holdings common stock, approximately 4,806,000 of our shares of Class A Common Stock and 4,806,000 of our shares of Preferred Stock will be distributed to Sears Holdings shareholders who hold Sears Holdings common stock as of the record date. The number of shares of Class A Common Stock and Preferred Stock that Sears Holdings will distribute to its shareholders will be reduced to the extent that cash payments are made in lieu of the issuance of fractional Class A Common Stock and Preferred Stock. In connection with the Distribution, each person who as of the record date holds outstanding unvested restricted stock issued pursuant to the Sears Holdings Corporation 2006 Stock Plan will Table of Contents receive a cash amount in lieu of any and all rights such holder may have to any shares of Class A Common Stock and Preferred Stock distributed in the Distribution with respect to such unvested restricted stock. Such cash amount will represent the right to receive on the applicable vesting date a cash payment from Sears Holdings equal to the value of the Class A Common Stock, Preferred Stock and cash in lieu of fractional shares that would have been distributed in the Distribution to such holder had such holder s unvested restricted stock been Sears Holdings common stock, calculated on the basis of the volume-weighted average price per share of Class A Common Stock and Preferred Stock, as the case may be, for the 10 trading-day period immediately following the distribution date. Record date The record date for the Distribution is the close of business on December 16, 2011. Distribution date The distribution date will be December 30, 2011. The spin-off On the distribution date, Sears Holdings will release all of its shares of Class A Common Stock and Preferred Stock to the distribution agent to distribute to Sears Holdings shareholders. The Distribution will be made in book-entry form on the distribution date. It is expected that it will take the distribution agent up to ten business days following the distribution date to complete the mailing of Direct Registration Account Statements and/or checks for cash in lieu of fractional shares. You will not be required to make any payment, surrender or exchange your Sears Holdings common stock or take any other action to receive your shares of Class A Common Stock and Preferred Stock. Class B and C Common Stock Immediately following the Distribution, Orchard will have shares of Class B Common Stock outstanding that collectively represent less than 0.5% of the voting power of Orchard and shares of Class C Common Stock outstanding that collectively represent approximately 20% of the general voting power of Orchard. Post-Distribution ownership Based on the ownership of Sears Holdings common stock outstanding on December 16, 2011, we anticipate that immediately following the Distribution, ESL will own approximately 61% of our outstanding Class A Common Stock, representing approximately 61% of the voting power of our outstanding Class A Common Stock and approximately 49% of the general voting power of our outstanding capital stock, and ESL will own approximately 61% of our outstanding Preferred Stock, which is our outstanding nonvoting capital stock. Immediately following the Distribution, ACOF will own 100% of our Class C Common Stock representing approximately 20% of the general voting power of our outstanding capital stock. See Security Ownership by Certain Beneficial Owners and Management in this Prospectus for a more detailed description of the beneficial ownership of our capital stock by certain shareholders following the Distribution. Table of Contents No fractional shares No fractional shares of Class A Common Stock or Preferred Stock will be distributed. Instead, the distribution agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing market prices and distribute the aggregate net cash proceeds of the sales pro rata to each holder who otherwise would have been entitled to receive a fractional share in the Distribution. Accordingly, if you hold fewer than 22.141777 shares of Sears Holdings common stock as of the record date, you will not receive any shares of our Class A Common Stock or Preferred Stock. Recipients of cash in lieu of fractional shares will not be entitled to any interest on payments made in lieu of fractional shares. The receipt of cash in lieu of fractional shares generally will be taxable to the recipient shareholders that are subject to U.S. federal income tax as described in The Spin-Off Material U.S. Federal Income Tax Consequences of the Spin-Off, in this Prospectus. Conditions to the spin-off The spin-off is subject to the satisfaction or waiver by Sears Holdings of the following conditions: the Sears Holdings board of directors shall have authorized and approved the Distribution and related transactions and not withdrawn such authorization and approval, and shall have declared the dividend of Class A Common Stock and Preferred Stock to Sears Holdings shareholders; each ancillary agreement contemplated by the distribution agreement between Orchard and Sears Holdings (the Distribution Agreement ) shall have been executed by each party thereto; the Securities and Exchange Commission (the SEC ) shall have declared effective our Registration Statement on Form S-1, of which this Prospectus is a part, under the Securities Act of 1933, as amended (the Securities Act ), and no stop order suspending the effectiveness of the Registration Statement shall be in effect, and no proceedings for such purpose shall be pending before or threatened by the SEC; our Class A Common Stock shall have been accepted for listing on the NASDAQ Capital Market or another national securities exchange or quotation system approved by Sears Holdings and our Preferred Stock shall have been accepted for quotation on the OTCQB, subject to official notice of issuance in each case; Sears Holdings shall have received the written opinion of Simpson Thacher & Bartlett LLP as to the satisfaction of certain requirements necessary for the spin-off to receive tax-free treatment under Section 355 of the Internal Revenue Code of 1986, as amended (the Code ), upon which the IRS will not rule; the Internal Transactions (as described in Certain Relationships and Related Party Transactions Agreements with Sears Table of Contents Holdings Distribution Agreement in this Prospectus) shall have been completed; no order, injunction or decree issued by any governmental authority of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution shall be in effect, and no other event outside the control of Sears Holdings shall have occurred or failed to occur that prevents the consummation of the Distribution; no other events or developments shall have occurred prior to the Distribution that, in the judgment of the board of directors of Sears Holdings, would result in the Distribution having a material adverse effect on Sears Holdings or the shareholders of Sears Holdings; Sears Holdings shall have received a certificate signed by our Chief Financial Officer, dated as of the distribution date, certifying that prior to the Distribution we have made capital and other expenditures, and have operated our cash management, accounts payable and receivables collection systems, in the ordinary course consistent with prior practice; prior to the distribution date, this Prospectus shall have been made available to the holders of Sears Holdings common stock as of the record date; the individuals listed as members of our post-Distribution board of directors in this Prospectus shall have been duly elected, and such individuals shall be the members of our board of directors immediately after the Distribution; prior to the Distribution, Sears Holdings shall deliver or cause to be delivered to Orchard resignations, effective as of immediately after the Distribution, of each individual who will be an officer or director of Sears Holdings (other than Sears Canada Inc.) after the Distribution and who is an officer or director of Orchard immediately prior to the Distribution; immediately prior to the Distribution, our amended and restated certificate of incorporation ( Amended and Restated Certificate of Incorporation ) and Amended and Restated Bylaws ( Amended and Restated Bylaws ), each in substantially the form filed as an exhibit to the Registration Statement on Form S-1 of which this Prospectus is a part, shall be in effect; and the private letter ruling from the Internal Revenue Service (the IRS Ruling ) received by Sears Holdings shall not have been revoked or modified in any material respect. The fulfillment of the foregoing conditions will not create any obligation on the part of Sears Holdings to effect the spin-off. We are not aware of any material federal or state regulatory requirements that must be complied with or any material approvals that must be obtained, other than compliance with SEC rules and regulations and Table of Contents the declaration of effectiveness of the Registration Statement by the SEC, in connection with the Distribution. Sears Holdings has the right not to complete the spin-off if, at any time, the board of directors of Sears Holdings determines, in its sole discretion, that the spin-off is not in the best interests of Sears Holdings or its shareholders, or that market conditions are such that it is not advisable to effect the Distribution. In addition, Sears Holdings may at any time and from time to time until the Distribution decide to abandon the Distribution or modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of all or part of the Distribution. Trading market and symbol We intend to list our Class A Common Stock on the NASDAQ Capital Market under the symbol OSH and to quote our Preferred Stock on the OTCQB, and expect that trading for both will begin the first trading day after the completion of the Distribution. We do not plan to have a when-issued market for our Class A Common Stock or Preferred Stock prior to the Distribution. Dividend policy We do not expect to pay dividends on our Class A Common Stock, Preferred Stock or any other shares of our capital stock for the foreseeable future. The terms of the Preferred Stock do not entitle the holders thereof to any dividends. The terms of the Preferred Stock will provide that dividends and other distributions may not be paid on any shares of our capital stock until all outstanding shares of the Preferred Stock have been repurchased or redeemed unless such dividend or distribution (i) has been unanimously approved by our board of directors, (ii) relates to a poison pill stockholder rights plan or (iii) is a distribution of cash in lieu of fractional shares made in connection with this Distribution. The loan documents relating to our Senior Secured Credit Facility (the Senior Secured Credit Facility ), our Senior Secured Term Loan (the Senior Secured Term Loan ), and our Real Estate Secured Term Loan (the Real Estate Secured Term Loan ) also restrict our ability to make distributions with respect to and to repurchase our capital stock and the capital stock of certain of our subsidiaries. The loan documents contain customary exceptions, including the ability to make distributions with additional shares of capital stock and to repurchase stock in accordance with benefit plans for our management and employees. Tax consequences to Sears Holdings shareholders Assuming that the spin-off qualifies as a tax-free transaction under Section 355 of the Code, Sears Holdings shareholders are not expected to recognize any gain or loss for U.S. federal income tax purposes solely as a result of the Distribution except to the extent of any cash received in lieu of fractional shares. See The Spin-Off Material U.S. Federal Income Tax Consequences of the Spin-Off in this Prospectus for a more detailed description of the U.S. federal income tax consequences of the Distribution. Table of Contents Each shareholder is urged to consult his, her or its tax advisor as to the specific tax consequences of the Distribution to that shareholder, including the effect of any state, local or non-U.S. tax laws and of changes in applicable tax laws. Relationship with Sears Holdings after the spin-off We will enter into the Distribution Agreement and other agreements with Sears Holdings and certain of its subsidiaries related to the spin-off. These agreements will govern the relationship between Orchard and Sears Holdings up to and subsequent to the completion of the Distribution. The Distribution Agreement, in particular, will provide for the principal steps to be taken in connection with the spin-off, the settlement or extinguishment of certain obligations between us and Sears Holdings and certain aspects of our relationship with Sears Holdings following the Distribution. We will enter into a transition services agreement with a subsidiary of Sears Holdings pursuant to which certain services will be provided on an interim basis following the Distribution (the Transition Services Agreement ). Further, in 2005 we entered into an agreement with Sears Holdings regarding the sharing of tax liabilities (the Tax Sharing Agreement ) in connection with our deconsolidation from Sears Holdings consolidated U.S. federal income tax group that governs certain indemnification rights with respect to tax matters. On October 26, 2011, the Company entered into an appliances agreement with a subsidiary of Sears Holdings relating to our sale of certain appliances and related protection agreements supplied to us by Sears Holdings on a consignment basis (the Appliances Agreement ). We also entered into three brand license agreements, subject to the approval of the audit committee of Sears Holdings (the Brands Agreements ), with a subsidiary of Sears Holdings pursuant to which Sears Holdings will allow us to purchase a limited assortment of Sears Holdings proprietary-branded Craftsman products, Easy Living and Weatherbeater paints, Kenmore-branded water heaters and consumer household products directly from vendors. We describe these arrangements in greater detail under Certain Relationships and Related Party Transactions Agreements with Sears Holdings and describe some of the risks of these arrangements under Risk Factors Risks Relating to the Spin-Off. Transfer agent After the Distribution, the transfer agent for our Class A Common Stock and Preferred Stock will be Wells Fargo Bank, N.A., South St. Paul, Minnesota. Distribution agent The distribution agent for the spin-off will be Wells Fargo Bank, N.A., South St. Paul, Minnesota. Risk factors You should carefully consider the matters discussed under the section entitled Risk Factors. Table of Contents

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+PROSPECTUS SUMMARY This is only a summary of certain terms of the prospectus. You should review the more detailed information contained elsewhere in this prospectus prior to making an investment in Peerless Systems Corporation ( Peerless ). For a more complete understanding of Peerless and this offering, we encourage you to read this prospectus in its entirety, especially the risks regarding Peerless discussed under Risk Factors and Peerless financial statements incorporated by reference hereto. Additional important information is set forth in the Fund Prospectus attached as Appendix A hereto. The Offeror Peerless Systems Corporation, a Delaware corporation, is transitioning its primary business from licensing imaging technology to the asset management industry. Peerless newly-formed subsidiary, Peerless Asset Management Inc., a Delaware corporation ( PAM ), is seeking to become a leading provider to investors of alternative investment strategies in a closed-end fund structure, which strategies are typically offered by hedge funds. Peerless will also continue to operate its legacy technology licensing business. Peerless common stock, par value $.001 per share (the Peerless Common Stock ), is traded on The Nasdaq Capital Market under the symbol PRLS . Locksmith Capital Advisors Inc., a Delaware corporation ( LCA ) will apply to become registered under the Investment Advisers Act of 1940, as amended (the Investment Advisers Act ). LCA is a direct, wholly-owned subsidiary of PAM and will be the investment advisor to Peerless Value Opportunity Fund, a Delaware business trust and a newly organized, non-diversified, closed-end management investment company (the Fund ). The Fund is the issuer of the Fund Common Shares included in the Units. Peerless executive offices are located at 300 Atlantic Street, Suite 301, Stamford, Connecticut 06901, and its telephone number is (203) 350-0040. The Offering Peerless is offering [ ] Units at a price of $10 per Unit. Each Unit is comprised of: (i) one Fund Common Share and (ii) one Peerless Warrant. The Fund Prospectus, which accompanies this prospectus, includes detailed information regarding the Fund and the Fund Common Shares. This prospectus provides information regarding Peerless and the offer and sale by Peerless of the Units, the Peerless Warrants and the Peerless Common Stock. You should read this prospectus, together with the Fund Prospectus, and keep both for future reference. The Underwriters have been granted an option to purchase up to [ ] additional Units to cover over-allotments, if any. See Plan of Distribution. Peerless has agreed to pay all organizational costs of the Fund and all offering costs of the Fund and Peerless (other than the sales load) that exceed $.04 per Unit. The Peerless Warrants The Peerless Warrants become exercisable 60 days following the effective date of this prospectus, provided that no exercise shall be permitted which would either result in (i) an increase in ownership of 20% or more of, or (ii) an aggregate ownership of 25% or more of, the Peerless Common Stock by any person or group. Each Peerless Warrant has an exercise price of $5.00 and is exercisable for one share of Peerless Common Stock. The Peerless Warrants expire on [ ][ ], 2013, two years after the effective date of this prospectus. See Peerless Systems Corporation Description of Peerless Securities in this prospectus. Who May Want to Invest Investors should consider their own investment goals, time horizon and risk tolerance before investing in the Units. An investment in the Fund may not be appropriate for all investors and is not intended to be a complete investment program. The Units may be an appropriate investment for you if you are seeking to invest in the Fund and the opportunity to participate through the Peerless Warrants in the growth of Peerless, the parent of the Fund s investment advisor. See Peerless Systems Corporation." Listing of Securities We have applied to list the Units, and Peerless Warrants and the Fund Common Shares on The Nasdaq Capital Market upon the consummation of the offering, subject to notice of issuance. The trading or ticker symbols of the Units, Peerless Warrants and Fund Common Shares will be PRLSU, PRLSW and PVOF, respectively. Subject to notice of issuance, the shares of Peerless Common Stock underlying the Peerless Warrants will be listed on The Nasdaq Capital Market under the symbol PRLS, the symbol under which the existing shares of Peerless Common Stock are listed.

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+S-1/A U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 We believe a significant contributing factor to our prospects are government regulations mandating the use of energy-efficient lighting, including the elimination of the production of traditional incandescent light bulbs in Europe by 2012 and in the United States by 2014, and regulations restricting the use of hazardous substances such as the mercury contained in CFLs. We believe these developments disrupt the well-entrenched lighting industry of past decades and, given the energy conservation and eco-friendly characteristics of our ESL lighting products, create significant opportunities for us to introduce our products into the market in place of incandescent bulbs, as well as CFLs and LEDs. Unlike LEDs, our lights also work with existing lighting fixtures without modification. In October 2011, we established a key strategic business relationship with Huayi Lighting Company Ltd., an experienced lighting products manufacturer. Under a new manufacturing agreement, Huayi Lighting has agreed, under our direction, to produce substantially all of our ESL lighting products for resale to our customers over the next five years. Through this relationship, Huayi Lighting is responsible for fabricating the required electronic components of our lights, sourcing the glass components from its multiple approved suppliers and using its established automated processes to assemble and package finished products. We expect the first shipment of lights from Huayi Lighting in January 2012. We have begun to transition our manufacturing operations to Huayi Lighting from our existing facility in the Czech Republic, which in the past has primarily provided us with product testing, engineering development and pilot production of our initial products. Through these development efforts in the Czech Republic, we have filed nine U.S. and related foreign patent applications, of which three patents have been granted and one application is expected to be granted shortly, covering important features of our current and planned lighting technology and products, and have accumulated over the past six years a substantial amount of technical know-how relating to our ESL technology. As of November 23, 2011, we employed a team of 28 research scientists, engineers and laboratory technicians concentrating on technology development and innovation. We intend in the future to establish a research and development center in New England to develop new products for the lighting industry by taking advantage of the latest technology advancements. Our executive officers and directors have significant experience in developing and executing a go-to-market business model in a competitive, high growth industry. In addition, our management team has assembled highly-skilled technical personnel in Europe and the United States to conduct ongoing research and product development of new lighting products and next-generation technologies. Corporate Information We were incorporated under the laws of the State of California in August 1996 under the name of Telegen Corporation. In late 2004, we began research and product development on our lighting technology and, in May 2008, changed our name to Vu1 Corporation to better reflect this business focus. Our principal executive offices are located at 469 Seventh Avenue, Suite 356, New York, New York 10018, and our telephone number is (212) 359-9503. Our Internet website address is http://www.vu1.com. The information on our website is not incorporated by reference into this prospectus, and you should not consider it part of this prospectus. AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (1) Based on 5,567,872 shares outstanding on November 23, 2011, the number of shares to be outstanding after this offering excludes the following: 591,181 shares of common stock reserved for issuance upon the exercise of outstanding stock options under our 2007 Stock Incentive Plan, 921,963 shares of common stock reserved for issuance upon the exercise of outstanding warrants, 374,346 shares of common stock reserved for issuance upon the conversion of our outstanding original issue discount convertible debentures, and 142,500 shares of common stock reserved for issuance under the underwriters warrants. Vu1 Corporation (Exact name of registrant as specified in its charter) California 3461 84-067714 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 469 Seventh Avenue, Suite 356 New York, New York 10018 (212) 359-9503 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) (1) Reflects our sale of 2,850,000 shares of common stock offered by this prospectus at an assumed public offering price of $7.00 per share, after deducting the underwriting discount and the estimated offering expenses that we will pay. Scott C. Blackstone, Ph.D. Vu1 Corporation Chief Executive Officer 469 Seventh Avenue, Suite 356 New York, New York 10018 (212) 359-9503 (Name, address, including zip code, and telephone number, including area code, of agent for service)

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+PROSPECTUS SUMMARY This prospectus summary contains basic information about us and this rights 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 entire prospectus, including the Risk Factors section, and the documents incorporated herein by reference. The following summary is qualified in its entirety by reference to the detailed information appearing elsewhere in this registration statement or incorporated by reference into this registration statement. Our Company Mace Security International, Inc. was incorporated in Delaware on September 1, 1993 and currently conducts its operations through one segment, the Security Segment. Our Business The Security Segment consists of three operating or reporting units: Mace Personal Defense, Inc., which sells consumer safety and personal defense products; Mace Security Products, Inc., which sells electronic surveillance equipment and products; and Mace CSSS, Inc., which provides wholesale security monitoring services. Table of Contents Our Products and Markets The Security Segment designs, manufactures, assembles, markets and sells a wide range of security products. The products include less-than-lethal Mace defense sprays, intrusion fencing, access control, security cameras and security digital recorders. The Security Segment also owns and operates an Underwriters Laboratories ( UL ) listed monitoring center that monitors video and security alarms for approximately 470 security dealer clients with over 63,500 end-user accounts including the March 31, 2011 acquisition of The Command Center, Inc. ( TCCI ). The Security Segment s electronic surveillance products and components are purchased from Asian and European manufacturers. Many of our products are designed to our specifications. Other products in the Security Segment are monitors, high-end digital and machine vision cameras and professional imaging components. We sell the electronic surveillance products and components primarily to installing dealers, distributors, system integrators and end users. The main marketing channels for our products are industry shows, trade publications, catalogs, the internet, telephone orders, distributors and mass merchants. Corporate Information Our principal executive offices are located at 240 Gibraltar Road, Suite 220, Horsham, Pennsylvania 19044. Our web site is www.mace.com. Information on our website is not incorporated in this prospectus and is not a part of this prospectus. Assets Held for Sale As of March 31, 2011, the Company owned three legacy car washes which are currently held for sale. Two of the car washes are located in Arlington, Texas and one car wash is located in Fort Worth, Texas. The Fort Worth, Texas car wash is leased by the Company. The three car washes are being marketed by the Company; but none of the car washes are currently under an Agreement of Sale. The Agreement of Sale for an Arlington, Texas car wash expired on May 31, 2011 without the sale having occurred. The assets and liabilities of the car washes are classified as assets and liabilities held for sale in the Company s consolidated balance sheets and the results of operations are classified as discontinued operations in the Company s consolidated statements of operations and the consolidated statements of cash flows. The Company has also listed for sale its warehouse office building located in Farmers Branch, Texas. We will use the proceeds from any sale of the assets for working capital. Liquidity As of March 31, 2011, we had working capital of approximately $6.4 million including cash and cash equivalents of $2.3 million. Our business requires a substantial amount of capital, most notably to fund our losses. We plan to meet these capital needs from various financing sources, including borrowings, cash generated from the sale of car washes and other assets, and the issuance of common stock. We have two loans outstanding to Merlin. The first loan with a principal balance of $675,000 which was due on April 28, 2011 was extended to July 6, 2011. The second loan in the amount of $1.4 million is due March 30, 2013. However, Merlin has the right to call the loan thirty days after the conclusion of the rights offering and Merlin s purchase of the Additional Stock. The $1.4 million loan also may be converted to common stock at Merlin s option upon the occurrence of certain trigger events. The proceeds of this rights offering will be used in part to pay the loans owed Merlin. We anticipate that the three remaining car washes held for sale will generate proceeds, net of related mortgages, in the range of approximately $1.7 million to $2.0 million. Our Texas warehouse is also listed for sale. We estimate the sale of the Texas warehouse will generate proceeds, net of related mortgage debt, of approximately $1.0 million to $1.2 million. Additionally, our debt covenants with JP Morgan Chase Bank, N.A. require us to maintain a total unencumbered cash and marketable securities balance of $1.5 million. We have been funding our losses to-date through the sale of assets. In 2010, we generated $3.1 million in cash from the sale of assets, including $990,000 from the sale of Linkstar and $2.1 million from the sale of four car washes, net of related mortgages. Our business is currently generating negative cash flow of approximately $250,000 to $300,000 per month. The current economic climate has made it difficult to sell the assets held for sale. This rights offering is being conducted to provide additional liquidity for the operation of the Company s business and for future acquisitions of wholesale security monitoring businesses and accounts. Merlin Partners, LP Loans The Company borrowed $1.35 million from Merlin Partners, LP ( Merlin ) on December 28, 2010 to fund a portion of a settlement payment to the Company s ex-CEO. The loan, which had an original maturity date of March 28, 2011, was extended to July 6, 2011. The loan was payable in two installments of $675,000 each upon the closing of each of two car washes that were under agreements of sale at December 31, 2010. The Company made a payment of $675,000 to Merlin upon the sale of the Lubbock, Texas car wash on March 8, 2011. The Company expects to pay the remaining balance owed plus accrued interest from the proceeds generated by the sale of a Dallas, Texas area car wash. Merlin is a fund managed by Ancora Advisors, a subsidiary of the Ancora Group. Richard A. Barone, a Company director, is Chairman of the Ancora Group. The loan bears interest at a rate of 12% per annum, and is secured by second liens on the Dallas, Texas area car wash and a security interest in the tradename Mace. As part of the consideration for the financing, Merlin was also granted a Common Stock Purchase Warrant (the Warrant ) to purchase up to 314,715 shares of the Company s common stock at an exercise price of $0.20 per share, expiring December 28, 2015. The Warrant contains anti-dilution provisions providing that Merlin will receive additional warrants exercisable into 2% of any common stock of Table of Contents the Company issued by the Company through December 28, 2011. The exercise price of the Warrant will be adjusted lower to equal the stock issuance price of any stock issued through December 28, 2011 at a price below $0.20. On March 30, 2011, we borrowed $1.4 million with an interest rate of 6% per annum from Merlin to fund the acquisition of a security monitoring company. The loan is due March 30, 2013. However, Merlin has the right to call the loan thirty days after the conclusion of the rights offering and Merlin s purchase of the Additional Stock ( Call Trigger Event ). Merlin s right to call the loan expires six months and forty business days after the Call Trigger Event. If the Call Trigger Event occurs and Merlin does not call the loan within the time allowed, the loan s maturity date becomes extended to March 30, 2016. The $1.4 million loan may also be converted to common stock at Merlin s option upon the occurrence of certain trigger events. The first trigger event, giving Merlin the right to convert the loan is the Company s failure to make the rights offering to the stockholders. If the Company does not make the rights offering to the stockholders, Merlin may convert the loan into common stock at a per share price equal to the lower of 75% of (i) the tangible book value of the Company; or (ii) the ten day average closing sales price of the common stock starting with the day that Merlin notifies the Company that Merlin has elected to convert the loan. If the rights offering is made to stockholders, and Merlin does not exercise its right to call for the payment of the loan, Merlin has the right to convert the loan into common stock through March 30, 2016, the new maturity date. The conversion right is at a per share price equal to the ten day average closing sales price of the common stock, starting with the trading day which is 30 trading days after the Call Trigger Event. In accordance with ASC 815, Derivatives and Hedging , the Company determined that the conversion feature of the loan met the criteria of an embedded derivative, and therefore the conversion feature of this loan needed to be bifurcated and accounted for as a derivative. The fair value of the embedded conversion was estimated at the date of issuance using the Monte Carlo model with the following assumptions: risk free interest rate: 0.16%; expected life of the option to convert of 4.7 years; and volatility: 48%. The fair value of the conversion option as of March 31, 2011 is $590,000 and is recorded as a derivative liability and as a discount to the debt. The conversion option will be marked-to-market each reporting period, with the changes in fair value reported in earnings. As compensation for the loan, Merlin received a five year warrant exercisable into 157,357 shares of common stock at an exercise price of $0.20 per share. The warrant contains an anti-dilution provision that provides that the Company will issue Merlin a warrant equal to 1% percent of any shares issued by the Company for one year after the date the warrant was issued. Any new warrant issued will be exercisable at $0.20 cents per share. The loan is secured by a security interest in the Mace name, a pledge of the stock of Mace CSSS, Inc. (the monitoring company subsidiary) and a security interest in the assets of Mace CSSS, Inc. The conversion features of the loan and the warrant may result in additional dilution to stockholders. Summary of this Offering Securities Offered We are distributing to holders of our common stock as of 5:00 p.m., Eastern Standard Time, on June , 2011, the record date, at no charge, non-transferable subscription rights to purchase shares of our common stock. You will receive one subscription right for every share of our common stock you owned as of the record date. Each subscription right entitles the holder to purchase three shares of our common stock for a price of $0.20 per share. We anticipate that the total purchase price for the securities sold in this rights offering will be up to $9.4 million. No assurances can be given, however, as to the level of participation in this rights offering. Basic subscription privilege The basic subscription privilege of each subscription right will entitle you to purchase three shares of our common stock for each share you owned on the record date, at a subscription price of $0.20 per share. We will not issue fractional shares of common stock in the rights offering, and holders will only be entitled to exercise a whole number of rights. Subscription price $0.20 per share To be effective, any payment related to the exercise of a subscription right must clear prior to the expiration of the rights offering. Over-subscription privilege If you purchase all of the shares of common stock available to you pursuant to your basic subscription privilege, you may also choose to subscribe for shares of our common stock that are not purchased by other holders through the exercise of their basic subscription privileges. You may subscribe for shares of our common stock pursuant to your over-subscription privilege, subject to proration of available shares. If there are not enough unsubscribed shares to honor all requests under the over-subscription privilege, all requests will not be filled. Record date 5:00 p.m., Eastern Standard Time, on June , 2011. Table of Contents Expiration date 5:00 p.m., Eastern Standard Time, on July , 2011, twenty five days after mailing this prospectus, unless we extend the rights offering period. Over-Subscription Limitation on Common Stock Purchase If sufficient shares of common stock are available, we will seek to honor your over-subscription request in full. If, however, over-subscription requests exceed the number of shares of common stock available for sale in the rights offering, we will allocate the available shares of common stock among each person properly exercising the over-subscription privilege first in an amount that will maintain the shareholder s percentage of ownership of issued common stock (calculated based on the percentage owned prior to the rights offering and issuance of the Additional Stock, if known by the Company) and then, if there is any remaining unsubscribed for shares, in proportion to the number of shares of common stock each person subscribed for under the basic subscription privilege. If this allocation results in any person receiving a greater number of shares of common stock than the person subscribed for pursuant to the exercise of the over-subscription privilege, then such person will be allocated only that number of shares for which the person over-subscribed, and the remaining shares of common stock will be allocated among all other persons exercising the over-subscription privilege on the same basis described above. The allocation process will be repeated until all shares of common stock have been allocated or all over-subscription requests have been satisfied, whichever occurs first. We reserve the right to reject any over subscription and we will, in most cases, reject an over-subscription to the extent the stockholder together with the stockholder affiliates would own 5% or more of the common stock after the over-subscription is exercised. If there are not enough unsubscribed shares to honor all requests pursuant to the over-subscription privilege, a portion of requested shares will not be fulfilled. No Minimum Subscription There is no minimum purchase requirement as a condition to accepting subscriptions. Additional Stock and Selling Stockholders We have entered into a Securities Purchase Agreement with Merlin Partners, a hedge fund which is under common control with Ancora. In accordance with the Securities Purchase Agreement, Merlin and two assignees of Merlin will purchase $4,000,000 of our common stock at the conclusion or termination of the rights offering. The assignees are Umberto Fedeli for 2,500,000 shares, and Peter Spitalieri for 2,500,000 shares. The purchase price will be $0.20 per share (the same price as the rights offering stock) less a $250,000 fee. The assignees and Merlin are sometimes collectively referred to in this Prospectus as the Selling Stockholders . The obligation of the Selling Stockholders to purchase the Additional Stock is not subject to any conditions in the control of Merlin or the other Selling Stockholders. The conditions to Merlin s obligation to purchase are within the control of the Company and, include: (i) the conclusion or termination of the Rights Offering; (ii) the Company s expansion of its Board of Directors to seven persons, and (iii) the compliance by the Company to the provisions of the Securities Purchase Agreement. The Additional Stock is being registered for resale under the Securities Act by the Selling Stockholders. Richard A. Barone, a member of our Board of Directors, is a controlling owner of Ancora Securities, Inc. and Ancora Advisors, LLC. Ancora Advisors, LLC is the manager of Merlin. Public Offering of Unsubscribed Stock Any unsubscribed shares remaining unsold at the conclusion of the rights offering may be offered to the public at, the per share rights offering exercise price, $0.20 per share. There will not be a public offering of unsubscribed shares, unless Ancora agrees to the public offering. See The Public Offering of Unsubscribed Shares of Common Stock. The offering period for the unsubscribed common stock, if offered, would commence on the trading date immediately following the date of the closing of the rights offering, and would expire at the earlier of the sale of all the shares or 5:00 p.m., Eastern Standard Time, on the tenth trading day after the closing of the rights offering. Subscription Price $0.20 per share exercise price for the common stock is payable in immediately available funds. To be effective any payment related to the exercise of the right must clear prior to the expiration of the rights offering. Table of Contents Use of Proceeds The proceeds from the rights offering, less fees and expenses incurred by us in connection with the rights offering, are intended to be used for general corporate purposes, including working capital, expansion of our personal defense product operation s marketing programs, possible repayment of loans made to the Company by Merlin, and further acquisitions of wholesale security monitoring businesses and accounts which the Company has identified. Non-Transferability of Subscription Rights The subscription rights may not be transferred or assigned at any time during or after the subscription period. Net Operating Loss Carryforwards In part, because the subscription rights being distributed to our stockholders are nontransferable, we do not anticipate that the rights offering would affect our ability to utilize our net operating loss carryforwards (NOLs) for federal income tax purposes if a majority of our stockholders exercise this rights to acquire shares in the rights offering, After applying the provisions of Internal Revenue Code regarding changes in ownership of corporations (i.e., Internal Revenue Code Section 382), the maximum amount of operating loss carryforwards that could be used to offset future taxable income is $51.3 million as of December 31, 2010. No Recommendation Neither our Board of Directors nor the dealer manager of this rights offering makes any recommendation to you about whether you should exercise your subscription rights. You are urged to consult your own financial advisors in order to make an independent investment decision about whether to exercise any of your subscription rights. We cannot assure you that the market price for our common stock will continue to be above the subscription price or that anyone purchasing shares of our common stock at the subscription price will be able to sell those shares in the future at the same price or a higher price than the subscription price. You are urged to make your decision based on your own assessment of our business and this rights offering. No Minimum Subscription Requirement There is no minimum subscription requirement. We will consummate the rights offering regardless of the amount raised from the exercise of subscription rights by the expiration date. Maximum Offering Size Unless our Board of Directors waives or changes the offering amount, we will raise no more than $9.4 million of subscription proceeds in this rights offering. No Revocation If you exercise any of your subscription rights, you will not be permitted to revoke or change the exercise or request a refund of monies paid. You should not exercise your subscription rights unless you are sure that you wish to purchase additional shares of our common stock at the subscription price. Once you exercise your subscription rights, you cannot revoke the exercise of your subscription rights even if you later learn information that you consider to be unfavorable and even if the market price of our common stock is below the subscription price. Material U.S. Federal Income Tax Considerations A holder of common stock should not recognize income, gain, or loss for U.S. federal income tax purposes in connection with the receipt, exercise or expiration of subscription rights in the rights offering. However, if this rights offering is deemed to be part of a disproportionate distribution under Section 305 of the Internal Revenue Code, your receipt of subscription rights in this offering may be treated as the receipt of a taxable distribution to you. You should consult your own tax advisor as to the particular tax consequences to you of the receipt, exercise or expiration of the subscription rights in light of your particular circumstances. Extension, Cancellation and Amendment Our Board of Directors may extend the expiration date for exercising your subscription rights Table of Contents for up to an additional 30 trading days in its sole discretion. Our Board of Directors may also cancel this rights offering. Any extension or cancellation of this offering will be followed as promptly as practicable by an announcement. In the event that we cancel this rights offering, all subscription payments that the subscription agent has received will be returned, without interest or deduction, as soon as practicable. We reserve the right to amend or modify the terms of the rights offering at any time prior to the expiration date of the offering. Procedure for Exercising Subscription Rights To exercise your subscription rights, you must take the following steps: If you are a registered holder of our common stock, the subscription agent must receive your payment for each share of common stock subscribed for pursuant to your subscription right at the initial subscription price of $0.20 per share and properly completed subscription rights certificate before 5:00 p.m., Eastern Standard Time, on July , 2011. 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. If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank, or other nominee, or if you would prefer that an institution conduct the transaction on your behalf, you should instruct your broker, dealer, custodian bank, or other nominee to exercise your subscription rights on your behalf and deliver all documents and payments to the subscription agent before 5:00 p.m., Eastern Standard Time, July , 2011. If you wish to purchase shares of our common stock through the rights offering, please promptly contact any broker, dealer, custodian bank, or other nominee who is the record holder of your shares. We will ask your record holder to notify you of the rights offering. You should complete and return to your record holder the appropriate subscription documentation you receive from your record holder. Foreign Stockholders We will not mail subscription rights certificates to foreign stockholders whose address of record is outside the United States, or is an Army Post Office (APO) address or Fleet Post Office. The subscription agent will hold the subscription rights certificates for such holder s account. To exercise subscription rights, stockholders with such addresses must notify the subscription agent and timely follow the procedures described in The Rights Offering Foreign Stockholders. Subscription Agent American Stock Transfer Trust Company, LLC Information Agent Phoenix Advisory Partners Dealer Manager Ancora Securities, Inc. Shares Outstanding after Completion of this Rights Offering Up to 62,942,900 shares of our common stock will be outstanding, assuming the maximum offering amount is subscribed for pursuant to this offering. An additional 20,000,000 shares of our common stock will be outstanding after Merlin s purchase of the Additional Stock.

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+PROSPECTUS SUMMARY This summary highlights some of the information contained elsewhere in this prospectus or incorporated by reference in this prospectus. It is not complete and does not contain all of the information that you should consider before investing in our common stock. You should carefully read this entire prospectus, including the information set forth under Risk Factors, as well as the information incorporated by reference, before you decide to invest in our common stock. In this prospectus, the Company , Spot Mobile International , we , us and our refer to Spot Mobile International Ltd. and its subsidiaries.

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+This summary highlights selected information appearing elsewhere in this prospectus and does not contain all the information you should consider before investing in our common stock. You should carefully read this prospectus in its entirety before investing in our common stock, including the section entitled Risk Factors, and our financial statements and related notes included elsewhere in this prospectus. Our Business We are a clinical-stage pharmaceutical company engaged in discovering and developing novel RNAi interference or RNAi-based therapeutics. We have a fully integrated drug development platform that spans therapeutic target identification based on our proprietary gene discovery science and technology, to clinical drug development. We have initially been focusing on RNAi-based therapeutics for the treatment of diseases associated with oxidative stress and ischemic injury. We believe that our insight into the molecular mechanisms underlying these diseases, combined with our ability to design, chemically modify and successfully deliver synthetic small-interfering RNA, or siRNA, to specific organs in the body, enables us to rapidly develop drug candidates, often directed against the same target across multiple therapeutic areas. We have three product candidates in clinical development in five different indications: PF-655 (also called PF-04523655 and previously RTP801i-14) for the treatment of diabetic macular edema and for wet age-related macular degeneration; QPI-1002 (previously I5NP or AKIi-5) for the prevention of acute kidney injury and for the prevention of delayed graft function in kidney transplant patients; and QPI-1007 for ocular neuroprotection. We have licensed PF-655 to Pfizer on an exclusive worldwide basis and we granted an option for an exclusive license to QPI-1002 to Novartis. In March 2011, we received the results of the Phase II DEGAS trial of PF-655 for diabetic macular edema, which demonstrated that the drug was well tolerated, with no observed drug related serious adverse events, and showed a dose dependent improvement in visual acuity over the standard of care. We have a broad pipeline based on our internally developed and proprietary chemically modified siRNA structures. Several of our product candidates are based on novel targets and therapeutic concepts discovered using our BiFARTM target gene discovery platform. We believe that our platform technologies, siRNA capabilities and intellectual property combined with expertise of our regulatory, medical, preclinical and clinical development group will enable us to continue to advance new product candidates into clinical development, either directly or through collaborations with major pharmaceuticals companies. RNAi Overview RNA interference, or RNAi, is a recently discovered process that occurs naturally within cells and, facilitated by siRNA, selectively silences the activity of specific genes. Genes are the basic units of inheritance. Genes provide cells with instructions for producing proteins encoded by them. Many human diseases are caused by the abnormal behavior of proteins. The ability to stop or reduce production of a protein by selectively silencing the gene that directs its synthesis could be very beneficial in the treatment of disease. We believe that RNAi-based therapeutics potentially have significant advantages over traditional therapies, including broad applicability to treat many diseases, the ability to selectively inhibit expression of disease-associated target genes, inherent drug potency and shortened drug discovery timelines. To date, the major challenges in the development of RNAi-based therapeutics have been delivery of siRNA molecules to the organ and cells relevant to a particular disease as well as siRNA drug specificity, nuclease stability and pro-inflammatory properties associated with innate immune response. 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 that 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 Commission, acting pursuant to said Section 8(a), may determine. TABLE OF CONTENTS Our Approach Our insight into the pathogenesis of diseases, combined with our proprietary targets and concepts and our siRNA delivery strategies, led us to select siRNA as the modality for our clinical programs. We believe that our integrated discovery and development approach, our siRNA technology platform and intellectual property are particularly well-suited to RNAi-based therapeutics and are based on the following main capabilities: Identifying clinically attractive drug targets and concepts, often but not exclusively using our BiFAR discovery platform. Using our BiFARTM discovery platform, we have identified and validated many gene and protein targets for diseases, including diseases associated with oxidative stress and ischemic injury. Our current clinical programs focus on diseases in organs that we viewed as attractive based on our ability to successfully deliver our siRNA molecules to the target cells in that organ. Selection of diseases associated with oxidative stress/ischemic injury across several therapeutic areas for the same target. We believe that our focus on diseases, which share common molecular mechanisms, will enable us to more quickly identify drug candidates capable of treating multiple diseases based on proprietary targets common to diseases in different organs of the body. For example, we have demonstrated in preclinical models that inhibition of the RTP801 gene has beneficial therapeutic effects in various diseases associated with oxidative stress, such as wet age-related macular degeneration in the eye and chronic obstructive pulmonary disease, or COPD in the lung. Furthermore, we have also demonstrated that temporary and reversible inhibition of the gene p53 limits the injury caused by oxidative stress in the kidney and in the inner ear, and thus is potentially useful for the treatment of acute renal failure and acute hearing loss. Designing and modifying our siRNA molecules to enable successful local or systemic delivery. Our siRNA drug candidates have a chemically modified, stabilized structure and properties that we believe offer significant advantages over standard siRNAs. In preclinical studies, we have successfully delivered siRNA molecules and suppressed target genes in the back of the eye, inner ear, proximal tubules of the kidney, lung and spinal cord, demonstrating both local and systemic delivery. We select the route of delivery that is clinically relevant for the given organ. Two of our siRNAs were delivered via local administration to the back of the eye in Phase I and Phase II studies. Our QPI-1002 was, according to publicly available information, the first siRNA administered systemically to human patients. Optimizing our siRNA molecules for improved potency, stability and selectivity. We use our internally developed siRNA structure and intellectual property to design lead drug candidates with enhanced properties and intellectual property position. We believe that our approach has the potential to generate several additional Investigational New Drug applications, or INDs, in the coming years, either for new indications for the same drug or for new drugs. In addition, our BiFARTM target discovery platform directly identifies clinically relevant critical genes and proteins that are responsible for certain disease traits, has historically been important to us. We have applied this platform in several disease programs. The application of the BiFARTM platform to diseases associated with oxidative stress yielded our pool of proprietary targets from which we have derived part of our current product candidates. In addition, from 1995 through 2005, the BiFARTM platform allowed us to generate cash for our operations as well as rights to potential products through agreements with several pharmaceutical companies. 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 offers to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MARCH 28, 2011 PRELIMINARY PROSPECTUS QUARK PHARMACEUTICALS, INC. Minimum Offering of 30,000 Units Maximum Offering of 45,000 Units Each Unit consisting of 100 Shares of Common Stock and 50 Warrants Quark Pharmaceuticals, Inc. is offering on a best efforts basis a maximum of 45,000 units and a minimum of 30,000 units, with each unit consisting of 100 shares of common stock, par value $0.001 per share, and 50 warrants, with each warrant exercisable into one share of common stock. This is our initial public offering, and no public market currently exists for our units or our common stock or our warrants. We estimate the offering price of each unit will be between 3,400 New Israeli Shekels (NIS) and 3,800 NIS per unit (which is between 34 NIS and 38 NIS per share and a corresponding one-half of a warrant comprising each unit). The offering price will be determined in an auction process and shall not be lower than 3,400 NIS (approximately $944.44), the minimum price for the purpose of this offering. Unless the offering is fully subscribed at a price higher than the minimum price, the offering will be priced at the minimum offering price. For further details regarding the auction process, see under the heading Plan of Distribution beginning on page 133 of this prospectus. The investors who participate in the auction process, subject to certain conditions, may be able to purchase, at the offering price, an additional allotment of units that does not exceed in the aggregate 15% of the maximum number of units offered in the public tender. For additional details regarding the additional allotment, see under heading Plan of Distribution beginning on page 133 of this prospectus. Each warrant shall be exercisable into one share of our common stock at an exercise price of NIS (approximately $ ) (such amount being equal to 125% of the offering price of one share of common stock and one-half of a warrant comprising a portion of a unit), which exercise price is linked to the representative U.S. dollar exchange rate as determined by the Bank of Israel on and subject to adjustment as described under the heading Description of Capital Stock'' beginning on page 122 of this prospectus. The warrants will be exercisable for two years from the date on which they are issued. Upon the closing of the offering, the shares of our common stock and the warrants comprising the units will be issued and will trade separately on the Tel Aviv Stock Exchange, or TASE. The effective price of one share of common stock comprising the units is NIS. The economic value of one warrant comprising the units is approximately NIS. The above-mentioned value of each warrant is based on the formula specified in the TASE guidelines, with a weekly standard deviation based on the Biomed sector as of February 28, 2011 of 6.74%. The annual capitalization rate is 48.60%, according to the capitalization coefficients for March 2011. The offering price per unit will be determined in an auction process on the TASE and shall not be lower than 3,400 NIS (approximately $944.44), the minimum price for the purpose of this offering. Unless the offering is fully subscribed at a price higher than the minimum price, the offering will be priced at the minimum offering price, and if the offering is not subscribed at the minimum offering price, the offering will be cancelled. For further details regarding the auction process, see under the heading Plan of Distribution beginning on page 133 of this prospectus. We have appointed a member of the TASE to act as our offering coordinator to administrate the offering. This offering is not underwritten. The NIS to U.S. dollar exchange rate used for amounts described in this prospectus is the exchange rate determined by the Bank of Israel on March 7, 2011 (which exchange rate is 3.60 NIS per $1.00). Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 12. Per Share Minimum Total Maximum Total Public minimum offering price $ $ $ Distribution commissions $ $ $ Minimum proceeds, before expenses, to Quark Pharmaceuticals, Inc. $ $ $ Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved 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 , 2011 TABLE OF CONTENTS Our Product Candidates The following table sets forth the status of our product pipeline: Product Candidate Indication Status Commercialization Rights PF-655 Diabetic Macular Edema Phase II DEGAS study terminated. Phase IIb study expected to be initiated during first half of 2011. Pfizer (Worldwide) PF-655 Wet Age-related Macular Degeneration Phase II MONET study ongoing, enrollment completed. Interim data received in November 2010. Final data expected in the second half of 2011. Pfizer (Worldwide) QPI-1002 Acute Kidney Injury Phase II expected to initiate dosing in the second half of 2011. Option granted to Novartis for Worldwide rights QPI-1002 Delayed Graft Function in Kidney Transplant patients Phase II ongoing (interim analysis expected by mid 2012). Option granted to Novartis for Worldwide rights QPI-1007 Non Arteritic Anterior Ischemic Optic Neuropathy Stratum 2 of Phase I, which may give early indication of the biological activity of QPI-1007, is ongoing. (Dosing and preliminary review of data expected to be completed during the second half of 2011.) Quark (Worldwide) QPI-1007 Glaucoma indication Preclinical toxicity studies initiated to enable Phase II multiple dosing. Quark (Worldwide) Program for pipeline siRNAs for neuro protection and neural regeneration Diseases of the central nervous system, eyes, ears, spinal cord injury, peripheral nerve injuries, neuropathic pain, hearing loss conditions, vestibular diseases. In vivo proof-of-concept was accomplished in spinal cord injury with a drug candidate with endpoints of post-injury recovery and reduction of neuropathic pain. Further in vivo studies are ongoing in several indications, including glaucoma, hearing loss and others. Quark (Worldwide) Program for respiratory system conditions Acute Lung Injury, Lung Transplantation In vivo proof-of-concept studies were accomplished in lung transplantation models. Further in vivo studies are ongoing. Quark (Worldwide) Program for chronic conditions by systemic administration of siRNA Chronic Kidney Disease Cancer Delivery studies and in vivo proof-of-concept studies at various stages. Quark (Worldwide) TABLE OF CONTENTS Product Candidate Indication Status Commercialization Rights Fibrotic diseases in collaboration with Nitto Denko Fibrotic conditions in the liver and other organs Preliminary proof of concept was successfully performed by Nitto Denko. We are currently performing siRNA design and delivery studies. Nitto Denko (Worldwide) PF-655 Phase II for Diabetic Macular Edema and for Wet Age-Related Macular Degeneration. PF-655 has been studied in two Phase II clinical trials for the treatment of diabetic macular edema and for the treatment of wet age-related macular degeneration. PF-655 is a stabilized, synthetic, chemically modified siRNA that inhibits our proprietary target RTP801, a gene we believe plays a significant role in wet age-related macular degeneration and diabetic macular edema. Wet age-related macular degeneration is the leading cause of central vision loss in the elderly and occurs when the light sensing cells in the central portion of the retina, called the macula, malfunction and over time cease to work. Diabetic macular edema is the result of retinal microvascular changes that occur in patients with diabetes and is the major cause of visual impairment in diabetic patients. We have licensed PF-655 to Pfizer on an exclusive worldwide basis. We have successfully completed our Phase I clinical trial in wet age-related macular degeneration patients. No drug-related adverse events were observed. Approximately 80% of subjects showed stable or improved vision two weeks after a single injection of the siRNA. A subset of patients in this study, 18 of the total 27 patients enrolled, showed a mean improvement of 4 letters (about one line gain) on a visual acuity test at 28 days after a single injection of PF-655. While the study was designed to test for safety, and not to establish efficacy, these changes were presented as clinically meaningful at the ARVO conference in 2009 by a lead investigator of the study, Dr. Quan Nguyen from the Wilmer Ophthalmological Institute of the Johns Hopkins University School of Medicine. We have received results in both Phase II trials. In the Phase II DEGAS trial for diabetic macular edema, the results demonstrated that the drug was well tolerated, with no observed drug related serious adverse events. 184 patients were randomly assigned to four treatment groups, with three dose levels of PF-04523655 (RTP801I-14) (0.4mg, 1mg, and 3mg) or laser. Following 12-months treatment with PF-655, a dose dependent improvement in visual acuity was observed with the best results achieved at the 3 mg level. At this dose, the mean improvement from baseline on a visual acuity test was 5.8 letters for all patients enrolled in this dose group while in patients treated with laser photocoagulation control (the current standard of care) visual acuity improved by only 2.4 letters on average (p=0.08). Furthermore, in a separate secondary analysis of the 111 patients who completed the 12 months follow-up visit, the mean improvement from baseline on a visual acuity test in the 3 mg group was 9.1 letters while in patients treated with laser photocoagulation control visual acuity improved by only 3.2 letters on average (p<0.01). Based on the results of this study, and the demonstration of dose related effect on vision, it was decided to conduct a further phase IIb study in order to test higher doses of PF-655 and to determine the optimal dose to be included in the pivotal phase III studies. The Phase II trial of PF-655 in wet age-related macular degeneration continues to be conducted by Pfizer. Patient dosing is complete, and an interim review of data in November 2010 determined that PF-655 produced increasing improvements in mean visual acuity over the 3-month dosing period but at 4 months, the primary time point, PF-655 was not numerically superior to Lucentis for mean visual acuity at any of the doses used in the study. Overall, in the review of data up to 4 months no safety concerns were identified in continuing the study. The study is therefore continuing as planned. Full data is expected in the second half of 2011. In March 2011, we amended our License Agreement with Pfizer. Under the amendment, Quark will conduct at its own expense a Phase IIb trial of PF-655 in diabetic macular edema at higher doses, under a protocol mutually agreed by Quark and Pfizer. A portion of the proceeds of this offering will be used to conduct this trial. We will deliver the trial data to Pfizer upon completion. After its review of the data, Pfizer will either make a milestone payment to us at that time in an amount which exceeds the anticipated cost of the trial and resume responsibility for continued development of PF-655 at Pfizer s expense, or will terminate its license and return the rights to the product. In consideration of us conducting the Phase IIb trial, Pfizer agreed to increase the overall development and product approval milestone payments associated with the first ophthalmic use of PF-655 and to increase the royalty rates under the agreement. TABLE OF CONTENTS QPI-1002 for Acute Kidney Injury and Delayed Graft Function. We completed two Phase I trials for the prevention of acute kidney injury in patients undergoing major cardiac surgery and for prevention of delayed graft function in kidney transplant patients. In both trials, QPI-1002 was administered systemically via intravenous injection with no dose-limiting toxicities observed. Based on publicly available information, we believe that this was the first siRNA administered systemically in a human clinical trial. QPI-1002 is a synthetic, chemically modified siRNA molecule designed to temporarily inhibit the expression of p53, a gene we believe plays a significant role in ischemic injury related conditions in the kidney. Acute kidney injury is a syndrome characterized by a rapid decline of kidney function leading to death in a high percentage of cases. Major cardiovascular surgery is one of the many causes of acute kidney injury. Currently, there are no effective drug therapies to prevent acute kidney injury. Delayed graft function results most often from ischemia-reperfusion injury that can occur during the transplantation process and is particularly common in kidneys from deceased donors. Delayed graft function is associated with poorer long-term outcome for the kidney transplant patient, with increased incidence of acute rejection, increased hospital stays and increased consumption of peri-transplant resources. We have recently initiated dosing in a Phase II trial for delayed graft function and expect to initiate dosing in a Phase II clinical trial for AKI within the second half of 2011. In August 2010 we granted to Novartis an option for a worldwide exclusive license to QPI-1002 for all indications. QPI-1007 for Non arteritic Anterior Ischemic Optic Neuropathy. QPI-1007 is being developed as a neuroprotective agent for the treatment of sudden vision loss associated with non-arteritic anterior ischemic optic neuropathy. We are conducting a Phase I trial to evaluate the safety and tolerability of QPI-1007 in patients suffering from of non-arteritic anterior ischemic optic neuropathy. QPI-1007 is a chemically modified siRNA and it is our first drug candidate based on novel siRNA structures developed internally by Quark. QPI-1007 is designed to inhibit the expression of the pro-apoptotic gene, caspase 2, via the RNAi pathway. Apoptosis (programmed cell death) is thought to be the main cause of the death of retinal ganglion cells in non-arteritic anterior ischemic optic neuropathy and glaucoma. In preclinical studies, QPI-1007 was effective in preserving retinal ganglion cell integrity in three different ocular disease models of retinal ganglion cell damage. If QPI 1007 is determined to be safe and effective in non-arteritic anterior ischemic optic neuropathy we may develop QPI-1007 also for glaucoma and/or other ocular disease in need for neuroprotective treatment. We expect to complete dosing and have preliminary results in our Phase I clinical trial in the second half of 2011. In addition to safety data, we have designed the study to identify a potential trend in biological activity compared to historical data. Depending on the results and subject to our future financial position, we may initiate Phase II trials in a glaucoma condition, in non-arteritic anterior ischemic optic neuropathy, in both indications or none of them. Pipeline Programs: We have three broad programs that aim to design and develop siRNA molecules based on our internally developed siRNA structures to treat diseases that are unmet medical needs. Most of the programs are in proof of concept studies in animal models, a subset of these is in lead candidate optimization stage, some are at the stage of delivery studies in vivo. We expect to file at least one IND application in 2012 based on research in these programs. We also expect to file an IND application in the research program we perform in collaboration with Nitto Denko. Our major internal research and development programs comprise: Neuroprotection and neural regeneration program. We include in this category our pipeline programs in diseases of the central nervous system, and diseases of the eyes and ear, in particular those diseases where nerve cell or neuron protection and /or regeneration of the long fibers of a nerve cell, or axons, carrying outgoing sensory and motor messages, is important. Also, in many cases neuronal injury is associated with allodynia, or neuropathic pain. We have demonstrated siRNA delivery to the neurons in several disease conditions listed below and we are developing a novel non-invasive delivery to the back of the eye, inner ear and brain. Our primary siRNA drug candidate for neuroregeneration and neuropatic pain is a siRNA designed to inhibit expression of a gene called RhoA with which we have shown proof of concept for both end points in spinal cord injury. We are now optimizing RhoA siRNA with the purpose of generating the lead siRNA for formal preclinical development. In line with our strategy of developing a drug candidate in several diseases based on common pathological mechanism, we are testing RhoA siRNA, together with TABLE OF CONTENTS siRNAs targeting other genes, in animal models for spinal cord injury, optic nerve regeneration, neuropathic pain, hearing loss and vestibular diseases such as Meneiere s disease, and other central nervous system diseases based on invasive and non invasive delivery to the back of the eye, inner ear and brain. Respiratory and inflammatory diseases program. Based on siRNA delivery by inhalation we have shown proof of concept for our dual siRNA drug candidate for prevention of primary graft dysfunction an animal model of lung transplantation. This drug cocktail may be useful for treatment of acute lung injury in conditions other than lung transplantation since the pathological mechanism of response to ischemic injury is essentially unchanged in diverse disorders. Treatment of chronic diseases by systemic administration. This category includes our development for treatment of chronic kidney disease and cancer indications. We are currently performing delivery optimization studies. Fibrotic diseases in collaboration with Nitto Denko. No effective treatments are available for most of the serious fibrotic diseases and our objective is to develop potential therapies within our fully-funded collaboration with Nitto Denko. The collaboration aims to develop one or more new siRNA drugs that may offer an effective treatment for fibrotic diseases. The collaboration utilizes Quark s technology and intellectual property in RNAi, potentially combined with Nitto Denko s delivery technology to identify, select, optimize and develop a new siRNA drug based on a therapeutic concept and target gene identified by Nitto Denko and its collaborating scientists. While the initial disease indication for development is yet to be determined by joint teams of Quark and Nitto Denko, potential diseases include liver fibrosis, lung fibrosis, bone marrow fibrosis and kidney fibrosis, all major unmet medical needs. Quark successfully performed a feasibility study funded by Nitto Denko confirming the validity of the concept of treating fibrotic disease with an siRNA drug inhibiting the Nitto Denko target gene. The collaboration was initiated in July 2010 and several potential drug candidates were generated and are being tested. We expect to file a first IND application in 2012. siRNA Technology Development We have an ongoing program that aims to develop new siRNA-related technologies and to improve our current technology platform and our intellectual property position in the RNAi space. This program has two arms: Development of novel siRNA structures that are free from third party IP. We have developed a number of novel structures and filed six patent applications to date. Based on our understanding of the siRNA mechanism, this program uses our siRNA expertise to identify critical positions and chemical modification patterns to enhance activity, reduce unwanted or off-target effects, minimize unwanted immune response effects and increase the stability of our siRNA drug candidates. Development of proprietary drug delivery methods. This program includes novel non- invasive delivery of siRNA to the inner ear, brain, back of the eye and novel methods of delivery to tumor cells. Israeli National siRNA Project Consortium The Israeli Chief Scientist and the head of the research and development national projects approved the establishment of a consortium headed by the wholly owned subsidiary of Quark, QBI Enterprises Ltd (QBI), together with several leading members of the industry and prominent scientists in academia in Israel, to develop novel generic technologies in the field of RNAi. We believe that the approval of a national project for siRNA is recognition of the government of Israel to financially support a project of national importance that can potentially create jobs and generate revenues for the State of Israel. TABLE OF CONTENTS Our License Agreement with Pfizer In September 2006, we granted Pfizer an exclusive worldwide license to develop and commercialize drug candidates that inhibit our proprietary target gene RTP801 through RNAi for both ophthalmic and non-ophthalmic indications. Under the agreement, Pfizer is responsible for all future preclinical and clinical development costs of the licensed drug candidates, as well as all regulatory filings and approvals with the exception of the Phase IIb trial in diabetic macular edema described in this paragraph. In March 2011, we amended our License Agreement with Pfizer to cause Quark to conduct at its own expense a Phase IIb trial of PF-655 in diabetic macular edema, under a protocol mutually agreed by Quark and Pfizer. We will deliver the data to Pfizer upon completion. After its review of the data, Pfizer will either make a milestone payment to us at that time in an amount which exceeds the anticipated cost of the trial and resume responsibility for continued development of PF-655 at Pfizer s expense, or will terminate its license and return to us the rights to the product. In consideration of us conducting the Phase IIb trial, Pfizer agreed to increase the overall development and product approval milestone payments associated with the first ophthalmic use of PF-655 and to increase the royalty rates under the agreement. We can terminate the Phase IIb trial if an independent monitoring committee determines the study to be futile, based on data at an interim point provided in the protocol. Pfizer continues performing the Phase II clinical trial in wet age-related macular degeneration in collaboration with us. Israel has been a major source of patients in the Phase II studies. Through December 31, 2010, Pfizer had paid us an aggregate of approximately $52.5 million in up-front fees, cost reimbursements and milestone payments. The agreement as amended provides for up to $384 million in development and product approval milestone payments, assuming the development and approval in all major markets of a product for two ophthalmic indications and at least one non-ophthalmic indication. Pfizer is required to pay us royalties on any sales of licensed products and up to an additional $309 million of sales-based milestone payments. Our Option Agreement with Novartis In August 2010, we granted Novartis an option for an exclusive worldwide license to develop and commercialize QPI-1002 and any other p53-directed siRNAs controlled by us for any indication. Under the agreement, Novartis paid us a non-refundable option grant fee of $10 million and has the right to exercise the option during the Phase II trials of QPI-1002. This right will expire on different dates depending on whether interim and/or final results of these trials meet pre-defined criteria. If Novartis exercises the option, Novartis will be responsible for further development following the current Phase II trials and Quark will be entitled to option exercise fees and development, product approval, and sales-based milestone payments of up to $670 million as well as to royalties on sales. Corporate Information We were incorporated in California in December 1993 under the name Expression Systems, Inc. In April 1997, we changed our name to Quark Biotech, Inc. In June 2007, we changed our name to Quark Pharmaceuticals, Inc. Our principal executive offices are located at 6501 Dumbarton Circle, Fremont, California, 94555, and our telephone number is (510) 402-4020. Our website address is www.quarkpharma.com. The information contained on our website is not incorporated into and does not constitute a part of this prospectus, and the only information that you should rely on in making your decision whether to invest in our common stock is the information contained in this prospectus and any free writing prospectus. As used in this prospectus, references to Quark, our, us and we refer collectively to Quark Pharmaceuticals, Inc. and all of its subsidiaries unless the context requires otherwise. TABLE OF CONTENTS THE OFFERING Securities offered by us 37,500 units (the mid point of the range of the units offered, as stated on the cover page of this prospectus), with each unit consisting of 100 shares of common stock and 50 warrants, with each warrant exercisable into one share of common stock Upon the closing of the offering, the shares of our common stock and the warrants comprising the units will be issued and will trade separately on the TASE Common stock to be outstanding after this offering 25,134,630 shares, assuming an offering of 37,500 units (or shares, if the additional allotment, if any, is purchased in full) Warrants to be outstanding after this offering 1,875,000 warrants, assuming an offering of 37,500 units, excluding 187,500 warrants to be issued to the distributors in this offering as part of their commission (or warrants, if the additional allotment, if any, is purchased in full) Terms of Warrants issued as part of the offering Exercise price of $, which is equal to 125% of the offering price of one share of common stock and one-half of a warrant comprising a unit being offered hereby. The Warrants may not be exercised by means of a cashless exercise. Exercisability each warrant is exercisable for one share of common stock. Exercise period each warrant will be immediately exercisable upon issuance and will expire two years from the date of issuance. Use of proceeds To conduct a Phase IIb clinical trial of PF-655, two Phase II clinical trials of our current product candidates QPI-1002, a Phase I clinical trial of QPI-1007 and continuation of the development of our product candidates in preclinical development, all subject to the receipt of necessary regulatory approvals and achievement of other milestones. If our financial resources permit, we would also seek to conduct a Phase II clinical trial of our product candidate QPI-1007 in non-arteritic anterior ischemic neuropathy and/or glaucoma. However, these clinical trials would be secondary to the completion of the trials described above as to which we have contractual commitments. Proposed Tel Aviv Stock Exchange symbol TABLE OF CONTENTS The number of shares of common stock that will be outstanding immediately after this offering is based on 25,134,630 shares of common stock outstanding as of February 28, 2011 and excludes: 2,610,274 shares of common stock issuable upon the exercise of outstanding options with a weighted average exercise price of $1.90 per share; 796,289 shares of common stock reserved for future issuance under our 1997 Stock Plan and 2007 Equity Incentive Plan; 500,000 shares of common stock reserved for future issuance under our 2010 Employee Stock Purchase Plan. 1,875,000 warrants, with each warrant exercisable for one share of common stock, upon issuance of 37,500 units in this offering; an additional allotment of units, if any; and 187,500 warrants to be issued to the distributors in this offering as part of their commission, with each warrant exercisable for one share of common stock. Except as otherwise indicated, all information in this prospectus assumes the conversion of all our outstanding shares of preferred stock into 17,996,100 shares of common stock prior to the completion of this offering. Currently, there is no public market for our common stock in the United States or anywhere else in the world and no assurances can be given that a public market will develop the United States or, if developed, that it will be sustained. We have applied to have our common stock is listed on the TASE. The shares of our common stock and Warrants which are being offered under this prospectus are expected to be listed for trading on TASE promptly after the registration statement filed with the SEC of which this prospectus is a part is declared effective. Concurrently with the effectiveness of the registration statement of which this prospectus forms a part, we are publishing a Supplemental Notice to an Incomplete Prospectus published by us in Israel which is intended for non-U.S. investors based in Israel. Such investors should refer to the Incomplete Prospectus and the Supplemental Notice, which together form the Israeli prospectus that we filed with the Israel Securities Authority, or ISA, and which will be available at http://www.magna.isa.gov.il. The Auction Process We plan to conduct this offering using an auction process for all investors, both individual and institutional. To participate in the auction, investors will submit bids to purchase units that specify the number of units the investor would be interested in purchasing and the price the investor would be willing to pay. Bids must be submitted to TASE members. We intend to use the auction to determine the offering price per unit for the offering. All valid bids to purchase units at or above the determined offering price per unit will receive an allocation of units at the offering price. If the number of units represented by successful bids exceeds the number of units we are offering, then all bidders making bids above the offering price per unit will receive all the units for which they bid, all bidders making bids at the offering price per unit will receive some of the units for which they bid, on a pro-rata basis, and all bidders making bids below the offering price per unit will receive no units. During the period in which the TASE members collect bids by potential investors, potential investors can withdraw or amend their bids. However, immediately at the conclusion of the auction period, which will occur on the day of the auction at a time to be published in a supplemental notice and either a free writing prospectus or an amendment to the registration statement of which this prospectus is a part, TASE members will stop accepting any amendments to placed bids or withdrawals thereof. At this point, the bids will become irrevocable. We will publish a press release announcing the commencement of the bidding process a few hours prior to the commencement including a detailed timetable of the auction day. See the section entitled Plan of Distribution for a description of how this process will work. TABLE OF CONTENTS SUMMARY FINANCIAL DATA The following summary financial data should be read together with our audited financial statements and accompanying notes and Management s Discussion and Analysis of Financial Condition and Results of Operations appearing elsewhere in this prospectus. Our historical results are not necessarily indicative of our future results. Years Ended December 31, Audited 2008 2009 2010 (in thousands, except share and per share data) Statements of Operations Data: Revenues $ 17,276 $ 2,655 $ 5,201 Cost of development services 1,719 1,712 1,200 Gross profit 15,557 943 4,001 Operating costs and expenses: Research and development 18,726 15,744 18,682 General and administrative 5,018 5,087 6,340 Total operating costs and expenses 23,744 20,831 25,022 Operating income (loss) (8,187 ) (19,888 ) (21,021 ) Financial income (expenses), net 722 87 (538 ) Income (loss) before income taxes (7,465 ) (19,801 ) (21,559 ) Income taxes (1,677 ) 160 (283 ) Net income (loss) (9,132 ) (19,641 ) (21,842 ) Changes of redemption value of Series F and H Preferred Stock (468 ) Deemed dividend as a result of warrants modification Income attributable to preferred shareholders Net loss to common Stockholders $ (9,132 ) $ (19,641 ) $ (22,310 ) Net loss per share of common stock: Basic and diluted income (loss) per share $ (2.76 ) $ (5.80 ) $ (6.58 ) Weighted average number of shares used in computing basic and diluted net loss per share: 3,307,871 3,388,119 3,388,530 Proforma net loss per share of common stock: Basic and diluted net loss per share pro forma (unaudited) (1.07 ) Weighted average number of shares used in computing basic net loss per share pro forma (unaudited): 20,394,767 TABLE OF CONTENTS As of December 31, 2010 Actual As adjusted 1 (in thousands) Balance Sheet Data: Cash and cash equivalents $ 13,887 $ 48,182 Working capital 5,856 39,794 Total assets 17,571 50,801 Deferred revenues 9,920 9,920 Redeemable convertible preferred stock 38,500 Total stockholders equity (deficiency) (37,383 ) 35,055 (1) The as adjusted balance sheet data reflects (i) the conversion of all our outstanding shares of preferred stock into shares of common stock prior to the completion of this offering, and (ii) the sale of 37,500 units (the mid point of the range of the units offered, as stated on the cover page of this prospectus) in this offering at an assumed initial public offering price of $10.00 per share and a corresponding one-half of a warrant which is the midpoint of the estimated price range, as set forth on the cover page of this prospectus, after deducting distribution commissions and estimated offering expenses. (2) Each $1.00 increase (decrease) in the assumed initial public offering price of $10.00 per share and a corresponding one-half of a warrant which is the midpoint of the estimated price range, as set forth on the cover page of this prospectus, would increase (decrease) each of cash and cash equivalents, working capital, total assets and total shareholders equity by approximately $3.50 million, assuming that the number of units offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting commissions and estimated offering expenses payable by us. We may also increase or decrease the number of units we are offering. Each increase (decrease) of one thousand units (or 100,000 shares of common stock and a corresponding 50,000 Warrants) in the number of units offered by us would increase (decrease) each of cash and cash equivalents, working capital, total assets and total shareholders equity by approximately $0.94 million, assuming that the assumed initial public offering price remains the same, and after deducting the estimated discounts and commissions and offering expenses payable by us. The proforma as adjusted information discussed above is illustrative only and will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. TABLE OF CONTENTS

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+This summary highlights certain information contained elsewhere in this prospectus or incorporated by reference herein. This summary does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, including the risks related to our business and investing in our common stock discussed under

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+Prospectus Summary 1

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+PROSPECTUS SUMMARY 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. You should carefully read this entire prospectus, as well as the information incorporated herein by reference, before deciding whether to invest in our Common Stock. You should carefully consider the risks, among other things, described under the heading Risk Factors in this prospectus and in the documents incorporated by reference into this prospectus to determine whether an investment in our Common Stock is appropriate for you. General First Federal Bancshares of Arkansas, Inc. The Company is a Texas corporation organized in January 1996 by the Bank for the purpose of becoming a unitary holding company of the Bank. The significant asset of the Company is the capital stock of the Bank. The business and management of the Company consists of the business and management of the Bank. The Company does not presently own or lease any property, but instead uses the premises, equipment and furniture of the Bank. At the present time, the Company does not employ any persons other than officers of the Bank, and the Company utilizes the support staff of the Bank from time to time. Additional employees will be hired as appropriate to the extent the Company expands or changes its business in the future. At March 31, 2011, the Company had $577.7 million in total assets, $542.9 million in total liabilities and $34.8 million in stockholders equity. The Company s executive office is located at the home office of the Bank at 1401 Highway 62-65 North, Harrison, Arkansas 72601, and its telephone number is (870) 741-7641. First Federal Bank. The Bank is a federally chartered stock savings and loan association formed in 1934. The Bank conducts business from its main office and seventeen full service branch offices, all of which are located in a six county area in Northcentral and Northwest Arkansas comprised of Benton, Marion, Washington, Carroll, Baxter and Boone counties. The Bank s deposits are insured by the Deposit Insurance Fund ( DIF ), which is administered by the Federal Deposit Insurance Corporation ( FDIC ), to the maximum extent permitted by law. The Bank is a community-oriented financial institution offering a wide range of retail and business deposit accounts, including noninterest bearing and interest bearing checking, savings and money market accounts, certificates of deposit, and individual retirement accounts. Loan products offered by the Bank include residential real estate, consumer, construction, lines of credit, commercial real estate and commercial non-real estate. However, the Bank s lending activities are currently restricted by regulatory orders. See Regulatory Enforcement Actions below. Other financial services include investment products offered through UVEST Financial Services; automated teller machines; 24-hour telephone banking; internet banking, including account access, bill payment, e-statements and online loan applications; Bounce ProtectionTM overdraft service; debit cards; and safe deposit boxes. The Bank is subject to examination and comprehensive regulation by the OTS, which is the Bank s chartering authority and primary regulator. The Bank is also regulated by the FDIC, the administrator of the DIF. The Bank is also subject to certain reserve requirements established by the Board of Governors of the Federal Reserve System and is a member of the Federal Home Loan Bank ( FHLB ) of Dallas, which is one of the 12 regional banks comprising the FHLB System. Regulatory Enforcement Actions. The OTS is the primary federal regulator of the Bank. As a result of the financial losses in 2009 and the increase in nonperforming assets and based on a regulatory examination of the Company and the Bank in the Fall of 2009, on April 12, 2010, the Company and the Bank consented to the Company Order and the Bank Order, respectively. The Orders became effective on April 14, 2010. Each of the Orders will remain in effect until terminated, modified or suspended by the OTS. Also, the Orders impose certain operations restrictions on the Company and, to a greater extent, the Bank, including lending and dividend restrictions. The Orders also require the Company and the Bank to take certain actions, including the submission to the OTS of capital plans and business plans to, among other things, preserve and enhance the capital of the Company and the Bank and strengthen and improve the consolidated Company s operations, earnings and Table of Contents profitability. The Bank Order specifically requires the Bank to achieve and maintain, by December 31, 2010, a Tier 1 (Core) Capital Ratio of at least 8% and a Total Risk-Based Capital Ratio of at least 12%. The Bank did not achieve these required levels by December 31, 2010, but after giving effect to the First Closing (see Recapitalization Plan below), the Bank did achieve these required levels by May 3, 2011. Copies of the stipulations and the Orders are included as Exhibits 10.7 to 10.10 to the Company s 2009 Annual Report on Form 10-K filed with the SEC on April 15, 2010 and are incorporated into this prospectus by reference. The descriptions of the Orders set forth in this prospectus do not purport to be complete, and are qualified by reference to the full text of the Orders. The Company and the Bank have taken such actions as necessary to comply with the provisions of the Orders which are currently effective and are continuing to work toward compliance with the provisions of the Orders with future compliance dates. Any material failure by the Company and the Bank to comply with the provisions of the Orders could result in further enforcement actions by the OTS. While the Company and the Bank intend to take such actions as may be necessary to comply with the requirements of the Orders, there can be no assurance that the Company or the Bank will be able to comply fully with the Orders, or that efforts to comply with the Orders will not have adverse effects on the operations and financial condition of the Company or the Bank. See Risk Factors, beginning on page 23 of this prospectus and in the documents incorporated by references into this prospectus. Recent Developments Results of the Special Meeting of the Stockholders. On April 29, 2011, at the Special Meeting of the Stockholders, the Company s stockholders approved, among other things, (i) an amendment to our Articles of Incorporation, as amended ( Articles of Incorporation ), to effect the Reverse Split and (ii) the issuance to Bear State of (A) 15,425,262 post-Reverse Split shares (the First Closing Shares ) of the Company s Common Stock at $3.00 per share (or $0.60 per share pre-Reverse Split) in a private placement, (B) a warrant (the Investor Warrant ) to purchase 2 million post-Reverse Split shares of our Common Stock at an exercise price of $3.00 per share (or $0.60 per share pre-Reverse Split) in a private placement, and (C) any unsold shares offered in the Rights Offering at a purchase price of $3.00 per share (or $0.60 per share pre-Reverse Split) in a private placement, subject to an overall limitation on Bear State s ownership of 94.90% of our Common Stock. Purchase of TARP Preferred Stock and TARP Warrant from Treasury. On May 3, 2011, pursuant to the terms of the Investment Agreement, Bear State purchased from the United States Department of Treasury ( Treasury ) for $6 million aggregate consideration, the Company s 16,500 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A ( Series A Preferred Stock ), including any accrued but unpaid dividends thereon, and related warrant dated March 6, 2009 to purchase 321,847 shares of the Company s Common Stock at an exercise price of $7.69 per share (the TARP Warrant ), both of which were previously issued to the Treasury by the Company through the Troubled Asset Relief Program Capital Purchase Program. Following its acquisition of the Series A Preferred Stock and the TARP Warrant, Bear State tendered each to the Company for cancellation in exchange for a $6 million credit towards the purchase price of the First Closing Shares. The Company then filed, on May 3, 2011, a Resolution Regarding a Series of Shares with the Texas Secretary of State, thereby cancelling the Series A Preferred Stock. Changes to the Company s Board of Directors and Senior Management. On April 29, 2011, in anticipation of Bear State s acquisition of the First Closing Shares and Investor Warrant and as contemplated by the terms of the Investment Agreement, the Company increased the size of its Board of Directors from five (5) to seven (7) members, and appointed Richard N. Massey, W. Dabbs Cavin, Scott T. Ford and K. Aaron Clark to serve on each Board of Directors effective immediately following Bear State s purchase of the First Closing Shares and Investor Warrant. On April 29, 2011, Kenneth C. Savells and Jeffrey L. Brandt, two members of the Company s Board of Directors, submitted resignations that became effective upon Bear State s purchase of the First Closing Shares and Investor Warrant. The foregoing new members of the Board of Directors were designated by Bear State pursuant to the terms of the Investment Agreement. Table of Contents Immediately following Bear State s purchase of the First Closing Shares and Investor Warrant, on May 3, 2011, the Board of Directors of the Company appointed the following individuals to serve on the senior management team of the Company: W. Dabbs Cavin, President; Christopher M. Wewers, Executive Vice President and Chief Operating Officer; and J. Russell Guerra, Executive Vice President and Chief Lending Officer. Larry Brandt remains Chief Executive Officer of the Company, Tommy Richardson has assumed the role of Executive Vice President and Chief Administrative Officer of the Company, and Sherri Billings remains Chief Financial Officer of the Company. Consummation of the Reverse Split and First Closing. On May 3, 2011, the Company amended its Articles of Incorporation to effect the Reverse Split and sold to Bear State (i) the First Closing Shares and (ii) the Investor Warrant (the effectiveness of the Reverse Split, the issuance of the First Closing Shares and the delivery of the Investor Warrant are referred to in this prospectus as the First Closing ) in exchange for aggregate consideration paid by Bear State to the Company of approximately $46.3 million, consisting of (x) $40.3 million in cash, and (y) the surrender by Bear State to the Company of the Series A Preferred Stock and TARP Warrant for a $6 million credit against the purchase price of the First Closing Shares. The sale of the First Closing Shares and Investor Warrant to Bear State is referred to herein as the Bear State Investment. After giving effect to the Bear State Investment in the Company and the aspects of the Recapitalization Plan that have occurred as of the date of this prospectus, Bear State owns approximately 94.70% of the Company s Common Stock (after taking into account the assumed exercise of the Investor Warrant), and, following the expiration of the Rights Offering, could own as much as 94.90% of the Company s Common Stock (after taking into account the overall limitation on Bear State s ownership and the exercise of the Investor Warrant and assuming no current stockholders subscribe to the Rights Offering). If the Rights Offering is fully subscribed by Legacy Stockholders, Bear State would own approximately 81.80% of the Company s Common Stock (after taking into account the assumed exercise of the Investor Warrant). As a result, the Company s current stockholders will own between approximately 5.10% and 18.20% of the Company s Common Stock following the Bear State Investment in the Company and the Rights Offering. Effect of First Closing on Net Operating Loss ( NOL ) Carryforwards. At March 31, 2011, the Bank had a $14.9 million federal NOL carryforward, and we expect the Bank to generate additional NOL carryforwards subsequent to this date. As a result of the Bear State Investment and the Company s market capitalization on May 3, 2011, the Company s ability to use its NOL carryforwards to offset future taxable income could be as low as $132,000 on an annual basis for a period of 20 years depending on the outcome of the Company and its advisors analysis of the available carryforward. Proposed Reincorporation into Arkansas. On May 3, 2011, the Board of Directors unanimously approved, and recommended that the Company s stockholders approve, a reincorporation of the Company from Texas to Arkansas by means of a plan of conversion. On June 22, 2011, at the Company s annual meeting of stockholders, stockholders will be asked to approve the reincorporation. If the reincorporation proposal is approved, the Company will be converted into an Arkansas corporation, and thereafter each share of Common Stock of the Company will represent one share of Common Stock in the resulting Arkansas corporation. A description of the resulting Arkansas corporation s capital stock is set forth herein under the section titled Description of Capital Stock Post-Reincorporation. Table of Contents The Rights Offering Issuer First Federal Bancshares of Arkansas, Inc. Securities Offered We are distributing at no charge to record holders of our Common Stock as of 5:00 p.m., Eastern Time, on the record date of March 23, 2011, one (1) non-transferable Right for each share of Common Stock then held on record (after taking into account the Reverse Split). For each Right that you own, you will have a Basic Subscription Right to buy from us three (3) shares of our Common Stock at a subscription price of $3.00 per share of Common Stock (or $0.60 per share pre-Reverse Split) and an Oversubscription Privilege. Subscription Price $3.00 per share of Common Stock (or $0.60 per share pre-Reverse Split). To be effective, any payment related to the exercise of a Right must clear prior to the Expiration Date. Right Each Right consists of a Basic Subscription Right and an Oversubscription Privilege. Basic Subscription Right For each whole Right that you own, you will have a Basic Subscription Right to buy from us three (3) shares of our Common Stock at the subscription price. You may exercise your Basic Subscription Right for some or all of the shares of Common Stock available for purchase under such Right, or you may choose not to exercise any portion of your Basic Subscription Right. Oversubscription Privilege Pursuant to the Oversubscription Privilege, if you timely and fully exercise your Basic Subscription Right, you may also subscribe for a portion of the shares of Common Stock offered in the Rights Offering that the other Rights holders do not purchase pursuant to their Basic Subscription Rights, subject to availability and allocation of such shares, and provided that no Rights holder may thereby acquire, together with its affiliates, beneficial ownership of 4.9% or more of the shares of our outstanding Common Stock. If oversubscription requests exceed the number of shares available, we will allocate the available shares pro rata among the Rights holders exercising the Oversubscription Privilege in proportion to the number of shares of our Common Stock a Rights holder owned on the Record Date relative to the aggregate number of shares of our Common Stock owned on the Record Date by all Rights holders exercising their Oversubscription Privilege. For additional details regarding the pro rata allocation process, see Questions and Answers Relating to the Rights Offering What is the Oversubscription Privilege? If you properly exercise your Oversubscription Privilege for a number of shares that exceeds the number of shares allocated to you, any excess subscription payments received by the subscription agent will be returned to you as soon as practicable, without interest or penalty, following the expiration of the Rights Offering. There is no minimum subscription amount required for consummation of the Rights Offering. However, your ability to purchase Common Stock in the Rights Offering is subject to an overall beneficial ownership limit of 4.9% of our outstanding shares of Common Stock, after giving effect to your participation in the Rights Table of Contents Offering and taking into account the holdings of your affiliates. No Fractional Shares Legacy Stockholders may only exercise the Basic Subscription Right and Oversubscription Privilege for whole shares. In the event, however, that fractional shares of Common Stock result from the application of the Oversubscription Allocation Formula to oversubscription requests, then such fractional shares will be eliminated by rounding down to the nearest whole share, with the total exercise price being adjusted accordingly. Any excess subscription payments received by the subscription agent will be returned, without interest or penalty, as soon as practicable. Record Date March 23, 2011. Expiration Date The Rights will expire at 5:00 p.m., Eastern Time, on June [ ], 2011. We do not intend to extend the Expiration Date. Use of Proceeds The total proceeds to us from the Rights Offering will depend on the number of Rights that are exercised. If we issue all 2,908,071 shares available, either in the Rights Offering or to Bear State, pursuant to its commitment in the Investment Agreement to backstop the Rights Offering in a private placement and assuming the backstop commitment would not require Bear State to exceed its overall ownership limitation of 94.90% of our Common Stock, the total proceeds to us, after deducting estimated offering expenses, will be approximately $8.5 million. We intend to first contribute a significant portion of the net proceeds from the Rights Offering in the form of capital to the Bank, which will use such amounts to further bolster its regulatory capital in compliance with the Bank Order, address its classified assets and then for general corporate purposes. Procedure for Exercising Rights To exercise your Rights, you must take the following steps: If you are a registered holder of Common Stock, you must deliver payment and a properly completed Rights certificate to the subscription agent before 5:00 p.m., Eastern Time, on June [ ], 2011. If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank or other nominee, your nominee will contact you. You will not receive a Rights certificate from the Company. Your broker, dealer, custodian bank or other nominee must exercise your subscription rights on your behalf and deliver all documents and payments to the subscription agent before 5:00 p.m., Eastern Time, on June [ ], 2011. Please follow the instructions of your nominee, who may require that you meet an earlier deadline for the delivery of your subscription forms and payment to the nominee. If you hold shares in a 401(k) Plan account, you must deliver a properly completed 401(k) Plan Participant Election Form to the Company before 5:00 p.m., Eastern Time, on June [ ], 2011. No Revocation All exercises of Rights are irrevocable, even if you later learn information that you consider to be unfavorable to the exercise of your Rights. You should not exercise your Rights unless you are certain that you wish to purchase additional shares of Common Stock at a subscription price of Table of Contents At or For the Three Months Ended March 31, At or For the Year Ended December 31, 2011 2010 2010 2009 2008 2007 2006 (Unaudited) Selected Operating Ratios(1): Return on average assets (1.02 )% 0.50 % (0.60 )% (5.84 )% 0.31 % 0.32 % 0.85 % Return on average equity (16.70 ) 8.25 (9.43 ) (57.33 ) 3.38 3.52 9.40 Average equity to average assets 6.13 6.01 6.34 10.19 9.24 9.21 9.04 Interest rate spread(2) 3.53 3.47 3.37 2.98 2.99 2.92 3.19 Net interest margin(2) 3.44 3.42 3.31 2.99 3.01 2.98 3.29 Net interest income after provision for loan losses to noninterest expense 57.23 84.63 48.25 (78.88 ) 68.75 79.21 111.28 Noninterest expense to average assets 5.05 3.62 4.00 3.84 2.92 2.82 2.59 Average interest earning assets to average interest bearing liabilities 93.73 96.82 96.37 100.40 100.49 101.68 102.92 Operating efficiency(3) 122.10 88.49 91.68 103.41 75.07 76.62 64.78 Asset Quality Ratios(4): Nonaccrual loans to total assets 8.89 6.68 8.22 5.86 2.83 3.84 2.16 Nonperforming assets to total assets(5) 16.48 11.50 15.68 10.67 6.77 5.17 2.69 General allowance for loan losses to classified loans(6) 23.12 28.14 22.00 28.17 12.12 7.45 9.42 General allowance for loan losses to total loans 5.94 4.93 5.68 4.97 0.61 0.35 0.27 Capital Ratios(7): Tangible capital to adjusted total assets 6.38 6.17 6.36 5.75 8.89 9.22 8.76 Core capital to adjusted total assets 6.38 6.17 6.36 5.75 8.89 9.22 8.76 Risk-based capital to risk-weighted assets 10.81 10.64 10.72 9.97 13.35 13.20 11.94 Other Data: Dividend payout ratio(8) Note (9) Note (9) Note (9) Note (9) 123.74 % 117.71 % 39.26 % Full service offices at end of period 18 18 18 20 20 18 Table of Contents $3.00 per share (or $0.60 per share pre-Reverse Split). However, notwithstanding any election forms received from participants (and other account holders) in the 401(k) Plan regarding the exercise of their Rights held by (or through) the 401(k) Plan, no Rights held by the 401(k) Plan will be exercised if the per share public trading price of our Common Stock at the close of trading on June [ ], 2011is not greater than or equal to the subscription price. For additional information, see The Rights Offering Special Instructions for Participants in Our 401(k) Plan. No Board Recommendation Neither our Board of Directors nor Bear State is making any recommendation regarding any exercise of your Rights. You should make your decision based on your own assessment of our business and the terms of the Rights Offering. For a discussion of some of the risks involved in investing in our Common Stock, see Risk Factors beginning on page 23 as well as the other information contained or incorporated by reference in this prospectus. Issuance of Common Stock If you purchase shares of Common Stock through the Rights Offering, we will issue those shares to you in book-entry, or uncertificated, form as soon as practicable after the completion of the Rights Offering. If you are a registered holder of Common Stock, we will mail to you a direct registration account statement detailing the number of shares of Common Stock that you have purchased in the Rights Offering. If you are a beneficial owner of shares that are registered in the name of a broker or other nominee, you should receive from your broker or other nominee confirmation of your purchase of shares of Common Stock in the Rights Offering. Stock certificates will not be issued for shares of our Common Stock purchased in the Rights Offering, except, however, if you are a registered holder, you may request a stock certificate once you receive your direct registration account statement. No Transfer or Sale of Rights The Rights may not be sold, transferred or assigned and will not be listed for trading on the NASDAQ Global Market or any other stock exchange or trading market. Market and trading symbol for the Common Stock Our Common Stock is listed on the NASDAQ Global Market under the symbol FFBH. Shares of our Common Stock issued in connection with the Rights Offering will also be listed on the NASDAQ Global Market under the same symbol. Federal Income Tax Consequences The receipt and exercise of Rights should not be taxable for U.S. federal income tax purposes. You should consult your tax advisor as to your particular tax consequences resulting from the Rights Offering. See Certain Material U.S. Federal Income Tax Considerations. Subscription Agent Registrar and Transfer Company Shares Outstanding After Completion of the Rights Offering As of the Record Date, we had 4,846,785 pre-Reverse Split shares of Common Stock outstanding. After giving effect to the Reverse Stock Split, which occurred on May 3, 2011, total issued and outstanding shares of Common Stock decreased from 4,846,785 to approximately 969,357. After giving effect to the issuance of the First Closing Shares, which occurred on May 3, 2011 immediately following the Reverse Split, total Table of Contents issued and outstanding shares of Common Stock increased from approximately 969,357 to approximately 16,394,619. After giving effect to the 2,908,071 shares to be issued in the Rights Offering and to Bear State as the backstop purchaser, in a private placement, if any, total issued and outstanding shares of Common Stock would increase from approximately 16,394,619 to approximately 19,302,690. On May 3, 2011 the Reverse Split became effective, which was prior to mailing this prospectus to stockholders. The number of shares offered and the subscription price in the Rights Offering have been adjusted to account for the Reverse Split. Shares purchased in the Rights Offering will not be subject to any further adjustments by reason of the Reverse Split. Backstop Commitment in Investment Agreement In accordance with the provisions of the Investment Agreement, Bear State has agreed to backstop the Rights Offering by purchasing from us in a private placement, at a price of $3.00 per share (or $0.60 per share pre-Reverse Split), any shares not purchased by the Rights holders, subject an overall limitation on Bear State s ownership of 94.90% of our Common Stock. If all the conditions to the Investment Agreement are met, the backstop commitment will ensure that we raise net proceeds of approximately $8.5 million through the Rights Offering and the commitment under the Investment Agreement to backstop the Rights Offering in a private placement (assuming the backstop commitment would not require Bear State to exceed its overall ownership limitation of 94.90% of our Common Stock). See Questions and Answers Relating to the Offering How does the backstop commitment work? Risk Factors Investing in our Common Stock involves risks. You should carefully consider the information under Risk Factors beginning on page 23 as well as the other information contained or incorporated by reference in this prospectus before making a decision to invest in our Common Stock. * Earnings (loss) per share and cash dividends declared per share have been restated to take account of the Reverse Split. (1) Ratios are based on average daily balances and are annualized, where appropriate, for the three month periods ended March 31, 2011 and 2010. (2) Interest rate spread represents the difference between the weighted average yield on average interest earning assets and the weighted average cost of average interest bearing liabilities, and net interest margin represents net interest income as a percent of average interest earning assets. (3) Noninterest expense to net interest income plus noninterest income. (4) Asset quality ratios are end of period ratios. (5) Nonperforming assets consist of nonperforming loans, net of specific valuation allowances, and real estate owned. Nonperforming loans consist of nonaccrual loans, net of specific valuation allowances and accruing loans 90 days or more past due. (6) Classified loans consist of loans graded substandard, doubtful or loss, net of specific valuation allowances. (7) Capital ratios are end of period ratios for First Federal Bank. (8) Dividend payout ratio is the total Common Stock dividends declared divided by net income available to common stockholders. (9) Dividend payout ratio is not meaningful for 2009 due to the Company s net loss in that year. No dividends were paid in 2010 or 2011. Table of Contents RISK FACTORS An investment in our Common Stock involves a high degree of risk. Before making an investment decision, you should carefully read and consider the risk factors described below as well as the other information included or incorporated by reference in this prospectus. Any of these risks, if they actually occur, could materially and adversely affect our business, financial condition, liquidity, results of operations and prospects, as well as the market price and liquidity of our Common Stock. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect us. In any such case, you could lose all or a portion of your original investment. General Risks Our or the Bank s failure to comply with applicable regulatory requirements and regulatory enforcement actions could result in further restrictions and enforcement actions. The Bank is subject to supervision and regulation by the OTS and FDIC. As a federally chartered stock savings and loan association, the Bank s good standing with its regulators is of fundamental importance to the continuation of its business and the business of the Company. On April 12, 2010, the Company and the Bank both consented to the Orders issued by the OTS. The Orders require the Company and the Bank to, among other things, file with the OTS an updated business plan and capital plan and submit to the OTS, on a quarterly basis with respect to the business plan and monthly with respect to the capital plan, variance reports related to the plans. The Bank Order also substantially restricts the Bank s lending activities. We have incurred and expect to continue to incur significant additional regulatory compliance expense in connection with the Orders, and we will incur ongoing expenses attributable to compliance with the terms of the Orders. In addition, the OTS must approve any deviation from our business plan, which could limit our ability to make any changes to our business, which could negatively impact the scope and flexibility of our business activities. The Company and the Bank may be unable to comply fully with the Orders, and efforts to comply with the Orders may have adverse effects on the operations and financial condition of the Company or the Bank. Any material failure to comply with the provisions of the Orders could result in further restrictions and enforcement actions by the OTS, which could impair our ability to operate in the normal course of business and, thereby, adversely affect our results of operation. The current economic environment poses significant challenges for us and could continue to adversely affect our financial condition and results of operations. The Company is operating in a challenging and uncertain economic environment, including generally uncertain national and local conditions. Financial institutions continue to be affected by sharp declines in the real estate market and constrained financial markets. Dramatic declines in the housing market over the past several years, with falling home prices and increasing foreclosures and unemployment, have resulted in significant write-downs of asset values by the Bank and other financial institutions. Continued declines in real estate values, home sales volumes, and financial stress on borrowers as a result of the uncertain economic environment could continue to have an adverse effect on the Bank s borrowers or their customers, which could adversely affect the Company s financial condition and results of operations. A worsening of these conditions would likely exacerbate the adverse effects on the Company and others in the financial services industry. For example, further deterioration in local economic conditions in the Company s markets could drive losses beyond that which is provided for in its allowance for loan losses or could require further writedowns in the Bank s real estate owned properties. The Company may also face the following risks in connection with these events: Economic conditions in the markets in which we operate that negatively affect housing prices and the job market have resulted, and may continue to result, in deterioration in credit quality of the Bank s loan portfolio, and such deterioration in credit quality has had, and could continue to have, a negative impact on the Company s business and financial condition. Table of Contents Market developments may affect consumer confidence levels and may cause adverse changes in payment patterns, causing increases in delinquencies and default rates on loans and other credit facilities. The processes the Company uses to estimate the allowance for loan losses may no longer be reliable because they rely on complex judgments, including forecasts of economic conditions, which may no longer be capable of accurate estimation. The Bank s ability to assess the creditworthiness of its customers may be impaired if the processes and approaches it uses to select, manage, and underwrite its customers become less predictive of future charge-offs. The Company has faced and expects to continue to face increased regulation of its industry, and compliance with such regulation has increased and may continue to increase its costs, limit its ability to pursue business opportunities, and increase compliance challenges. As these conditions or similar ones continue to exist or worsen, the Company could experience continuing or increased adverse effects on its financial condition and results of operations. We have a high percentage of nonperforming loans and classified assets relative to our total assets. If our allowance for loan losses is not sufficient to cover our actual loan losses, our results of operations will be adversely affected. At March 31, 2011, our net nonperforming loans totaled $51.4 million, representing 13.2% of total loans and 8.9% of total assets. At March 31, 2011, real estate owned totaled $43.9 million or 7.6% of total assets. As a result, the Company s total nonperforming assets amounted to $95.2 million or 16.5% of total assets at March 31, 2011. Further, assets classified by management as substandard, including nonperforming loans and real estate owned, totaled $143.7 million, representing 24.9% of total assets. At March 31, 2011, our allowance for loan losses was $29.1 million, consisting of $23.1 million of general loan loss allowances and $6.0 million of specific valuation allowances. The general valuation allowance represents 45.0% of nonperforming loans. In the event our loan customers do not repay their loans according to their terms and the collateral securing the payment of these loans is insufficient to pay any remaining loan balance, we may experience significant loan losses, which could have a material adverse effect on our financial condition and results of operations. Management maintains an allowance for loan losses based upon, among other things: historical experience; repayment capacity of borrowers; an evaluation of local, regional and national economic conditions; regular reviews of delinquencies and loan portfolio quality; collateral evaluations; current trends regarding the volume and severity of problem loans; the existence and effect of concentrations of credit; and results of regulatory examinations. Based on these factors, management makes various assumptions and judgments about the ultimate collectability of the respective loan portfolios. The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and our management must make significant estimates of Table of Contents current credit risks and future trends, all of which may undergo material changes. In addition, our Board of Directors and the OTS periodically review our allowance for loan losses and may require an increase in the provision for possible loan losses or the recognition of further loan charge-offs. The OTS judgments may differ from those of our management. In connection with the OTS examination in the third quarter of 2010, the Company provided an additional $5.6 million to the allowance for loan losses for the quarter ended September 30, 2010. Another OTS/FDIC examination was conducted in the first quarter of 2011. While the OTS/FDIC examination report has not been provided to the Company as of the date of this prospectus, it is anticipated that the Company will not be required to increase the general valuation allowance for loans. While we believe that the allowance for loan losses is adequate to cover current losses, we may determine that we need to increase our allowance for loan losses or regulators may require an increase in our allowance. Either of these occurrences could materially and adversely affect our financial condition and results of operations. In the event the proceeds from the First Closing are not available for any reason, we would not have any capital available to invest in the Bank and any further increases to our allowance for loan losses and operating losses would negatively impact our capital levels and make it more difficult to achieve the capital levels set forth in the Bank Order. Liquidity needs could adversely affect our results of operations and financial condition. The Bank s primary sources of funds are deposits, sales, calls or maturities of securities, and loan repayments. While scheduled loan repayments are a relatively stable source of funds, they are subject to the ability of borrowers to repay the loans. The ability of borrowers to repay loans can be adversely affected by a number of factors outside of our control, including changes in economic conditions, adverse trends or events affecting business industry groups, reductions in real estate values or markets, business closings or lay-offs, inclement weather, natural disasters and international instability. Additionally, deposit levels may be affected by a number of factors, including rates paid by competitors, general interest rate levels, returns available to customers on alternative investments, financial condition or regulatory status of the Bank, actions by the OTS and general economic conditions. Accordingly, we may be required from time to time to rely on secondary sources of liquidity to meet withdrawal demands or otherwise fund operations. Those sources may include Federal Home Loan Bank advances, repurchase agreements and the Federal Reserve discount window. Currently, however, the Bank may only borrow from the Federal Home Loan Bank on a short-term basis and the Federal Reserve discount window is available only when no other sources of liquidity are available. Our financial flexibility will be constrained if we continue to incur losses and are unable to maintain our access to funding or if adequate financing is not available at acceptable interest rates. We may seek additional debt in the future. Additional borrowings, if sought, may not be available to us or, if available, may not be available on reasonable terms. If additional financing sources are unavailable, or are not available on reasonable terms, our financial condition, results of operations and future prospects could be materially adversely affected. Finally, if we are required to rely more heavily on more expensive funding sources to support future growth, our revenues may not increase proportionately to cover our costs. In addition, we may be required to slow or discontinue capital expenditures or make other investments or liquidate assets should those sources not be adequate. A significant portion of our loan portfolio is related to commercial real estate, construction, commercial business and consumer lending activities and certain of our loans are secured by vacant or unimproved land. Uncertainties related to these lending activities may negatively impact these loans and could adversely impact our business. As of March 31, 2011, approximately 27% of our loans were related to commercial real estate and construction projects. Commercial real estate and construction lending generally is considered to involve a higher degree of risk than single-family residential lending due to a variety of factors, including generally larger loan balances, the dependency on successful completion or operation of the project for repayment, the difficulties in estimating construction costs and loan terms which often do not require full amortization of the loan over its term and, instead, provide for a balloon payment at stated maturity. Our loan portfolio also includes commercial business loans to small- to medium-sized businesses, which generally are secured by various equipment, machinery and other corporate assets, and a variety of consumer loans, including automobile loans, deposit account secured loans and unsecured loans. Although commercial business loans and consumer loans generally have shorter terms and higher interest rates than mortgage loans, they generally involve more risk than mortgage loans because of the nature of, or in certain cases the absence of, the collateral which secures such loans. In addition, a portion of our loan portfolio is Table of Contents secured by vacant or unimproved land. Loans secured by vacant or unimproved land are generally more risky than loans secured by improved one- to four- family residential property. Since vacant or unimproved land is generally held by the borrower for investment purposes or future use, payments on loans secured by vacant or unimproved land will typically rank lower in priority to the borrower than a loan the borrower may have on their primary residence or business. These loans are susceptible to adverse conditions in the real estate market and local economy. Uncertainties related to these lending activities could result in higher delinquencies and greater charge-offs in future periods, which could adversely affect our financial condition or results of operations. We have had losses in recent periods and may be unable to return to profitability in the near future which would adversely affect our stock price. We incurred net losses available to common stockholders of $1.7 million for the quarter ended March 31, 2011 and $4.9 million and $46.2 million for the years ended 2010 and 2009, respectively. Our ability to return to profitability will depend on whether we are able to implement our business plan and reduce credit losses in the future, which will depend, in part, on whether economic conditions in our markets improve. We may be unsuccessful in executing our business plan. Further, even if we successfully implement our business plan, we may be unable to curtail our losses now or in the future. If we continue to incur significant operating losses, our stock price may decline. Future FDIC insurance premiums or special assessments may adversely impact our earnings. The Bank s deposits are insured up to applicable limits by the Deposit Insurance Fund of the FDIC. Under the FDIC s risk-based assessment system, insured institutions are assessed in accordance with one of four risk categories based on supervisory evaluations, regulatory capital levels and certain other factors, with less risky institutions paying lower assessments. An institution s assessment rate depends upon the category to which it is assigned, and certain adjustments specified by FDIC regulations. On May 22, 2009, the FDIC adopted a final rule levying a five basis point special assessment on each insured depository institution s assets minus Tier 1 capital as of June 30, 2009. We recorded an expense of approximately $350,000 during the quarter ended June 30, 2009 to reflect the special assessment. In addition, the FDIC increased the general assessment rate and, therefore, our FDIC general insurance premium expense increased compared to prior periods. The FDIC also has adopted a rule pursuant to which all insured depository institutions were required to prepay their estimated assessments for the fourth quarter of 2009, and for all of 2010, 2011 and 2012. This pre-payment was due on December 30, 2009. Under the rule, the assessment rate for the fourth quarter of 2009 and for 2010 is based on each institution s total base assessment rate for the third quarter of 2009, modified to assume that the assessment rate in effect on September 30, 2009 had been in effect for the entire third quarter, and the assessment rate for 2011 and 2012 would be equal to the modified third quarter assessment rate plus an additional 3 basis points. In addition, each institution s base assessment rate for each period is calculated using its third quarter assessment base, adjusted quarterly for an estimated 5% annual growth rate in the assessment base through the end of 2012. The Bank received an exemption from this prepayment requirement due to its potential impact on the Bank s liquidity position but will pay each quarterly assessment as it becomes due. Recent insured institution failures, as well as deterioration in banking and economic conditions, have significantly increased the loss provisions of the FDIC, resulting in a decline in the designated reserve ratio to historical lows. The FDIC expects a higher rate of insured institution failures in the next few years compared to recent years. Therefore, the reserve ratio may continue to decline. These developments have caused the premiums assessed on us by the FDIC to increase and materially increase FDIC insurance expense. Our FDIC insurance expense totaled $1.9 million, $1.7 million and $374,000, respectively, in the years ended 2010, 2009 and 2008, respectively, and totaled $433,000 and $515,000 for the quarters ended March 31, 2011 and 2010, respectively. The increased assessment rates discussed above, together with any further increases in assessment rates or additional special assessments, may negatively impact future earnings. On February 7, 2011, the FDIC finalized the rule to redefine the deposit insurance assessment base as required by the Dodd-Frank Act. The base is defined as average consolidated total assets for the assessment period Table of Contents less average tangible equity capital with potential adjustments for unsecured debt, brokered deposits and depository institution debts. The FDIC also adopted a new rate schedule and suspended dividends indefinitely. In lieu of dividends, the FDIC adopted progressively lower assessment rate schedules that will take effect when the reserve ratio exceeds 1.15 percent, 2 percent and 2.5 percent. All changes and revised rates went into effect April 1, 2011. Based on the new assessment base and rate schedule, the Bank expects its FDIC insurance premiums to decline in 2011 compared to 2010. We are heavily regulated, and that regulation could limit or restrict our activities and adversely affect our financial condition. We operate in a highly regulated industry and are subject to examination, supervision, and comprehensive regulation by various federal and state agencies, including the OTS and the FDIC. Our compliance with these regulations is costly and may restrict some of our activities, including payment of dividends, mergers and acquisitions, investments, loans and interest rates and locations of offices. The regulators interpretation and application of relevant regulations are beyond our control and may change rapidly and unpredictably. Banking regulations are primarily intended to protect depositors. The regulations to which we are subject may not always be in the best interest of investors. In light of current conditions in the global financial markets and the global economy, regulators have increased their focus on the regulation of the financial services industry. Over the past several years, the U.S. financial regulators responding to directives of the Obama Administration and Congress have intervened on an unprecedented scale. New legislative proposals continue to be introduced in the U.S. Congress that could further substantially increase regulation of the financial services industry and impose restrictions on the operations and general ability of firms within the industry to conduct business consistent with historical practices, including with respect to compensation, interest rates and the effect of bankruptcy proceedings on consumer real property mortgages. Further, federal and state regulatory agencies may adopt changes to their regulations and/or change the manner in which existing regulations are applied. We cannot predict the substance or effect of pending or future legislation or regulation or the application of laws and regulation to us. Compliance with current and potential regulation and scrutiny may significantly increase our costs, impede the efficiency of our internal business processes, require us to increase our regulatory capital and limit our ability to pursue business opportunities in an efficient manner by requiring us to expend significant time, effort and resources to ensure compliance. Additionally, evolving regulations concerning executive compensation may impose limitations on us that affect our ability to compete successfully for executive and management talent. In addition, given the current economic and financial environment, our regulators may elect to alter standards or the interpretation of the standards used to measure regulatory compliance or to determine the adequacy of liquidity, certain risk management or other operational practices for financial services companies in a manner that impacts our ability to implement our strategy and could affect us in substantial and unpredictable ways and could have an adverse effect on our business, financial condition and results of operations. Furthermore, the regulatory agencies have extremely broad discretion in their interpretation of the regulations and laws and their interpretation of the quality of our loan portfolio, securities portfolio and other assets. If any regulatory agency s assessment of the quality of our assets differs from our assessment, we may be required to take additional charges that would have the effect of materially reducing our earnings, capital ratios and stock price. The U.S. Congress passed the Dodd-Frank Act on July 21, 2010, which includes sweeping changes in the banking regulatory environment. The Dodd-Frank Act will change our primary regulator and may, among other things, restrict or increase the regulation of certain of our business activities and increase the cost of doing business. While many of the provisions in the Dodd-Frank Act are aimed at financial institutions significantly larger than us, and some will affect only institutions with different charters than us or institutions that engage in activities in which we do not engage, it will likely increase our regulatory compliance burden and may have other adverse effects on us, including increasing the costs associated with our regulatory examinations and compliance measures. We are closely monitoring all relevant sections of the Dodd-Frank Act to ensure continued compliance with laws and regulations. While the ultimate effect of the Dodd-Frank Act on us cannot be determined yet, the law is likely to result in increased compliance costs and fees paid to regulators, along with possible restrictions on our operations. Table of Contents

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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. As used throughout this prospectus, the terms China Kangtai, CKGT, the Company, we, us, and our refer to China Kangtai Cactus Bio-Tech Inc., and all of its subsidiaries and affiliated companies. OUR COMPANY The Company is principally engaged in the production, R&D, sales and marketing of products derived from cacti. The Company s product lines include cactus nutraceuticals, cactus nutritional food and drinks, as well as cactus raw and intermediate materials. The Company has over 387 acres of cactus-farming bases in the Guangdong and Heilongjiang Provinces of China. The Company predominantly grows three species of cacti which are Mexican Pyramid, Mexican Milpa-Alta and Mexican Queen. Mexican Pyramid and Queen cacti are used for cactus fruit drinks and nutraceutical products; Mexican Milpa-Alta is mainly used for cactus nutritional food products. Most of the cactus fruits are processed into cactus fruit juice, which is the raw material for cactus nutritional drinks. Most of the harvested edible cacti are processed into dry powders, which are raw materials for cactus nutraceuticals. The Company s annual production capability of edible cacti in 2010 is 11,976 tons. The Company engages with, by co-operative production agreements, local pharmaceutical, food and beverage manufacturers to produce its products. This strategy allows the Company to fill the orders quickly with short production runs and to reduce the requirements in fixed assets investment. The Company currently has entered into co-production agreements with five processors in China. They are Harbin Bin County Hualan Dairy Factory, Harbin Ice Lantern Noodle Factory, Tsingtao Brewry (Harbin) Inc., Harbin Diwang Pharmacy Co., Ltd. (a GMP certified processor), and Mudanjiang Kangwei Health Food Company, Ltd. Pursuant to these contracts, the Company provides raw materials, quality control guidelines and technical support while the processors provide other materials, processing facilities and labor to manufacture products for the Company. These processors are required to follow strictly the Company s guidelines and instructions for production. The Company inspects all final products. The Company currently has long term agreements with all five processors which may be renewed at expiration in 2012. GMP or Good Manufacturing Practice certifications are awarded by the State Food and Drug Administration of China to processors which meet the safety and quality assurance standards set by the State Food and Drug Administration of China. In October 2007, the Company has signed a new agreement with Harbin Meijia Bio-Tech Co., Ltd. All of the above co-operative production agreements have been renewed during January and March of 2008. The Company has also established its own cactus beverage and fruit wine production facilities. The Company s cactus beverage product category includes cactus beer, cactus fruit wine (including the brand name of Overlord Scourge Flower Imperial Wine), cactus palm juices and cactus fruit drinks. The Company has its own R&D facility, the Heilongjiang Sino-Mexico Cactus Development and Utilization Institute, which is certified by Heilongjiang Science & Technology Committee. The Institute has independently developed many patented cactus-based nutraceuticals and nutritional food and drink product formulas and production processes. In order to quickly penetrate the markets in China, enhance the efficiency of distributions, lower sales costs and administrative overheads, starting August 2006, the Company has reformed its sales and distribution models and gradually disposed its own domestic distribution network of approximately 200 self-owned, franchised chain and Kangtai branded stores in Harbin, Beijing, Guangzhou and other cities in China. The Company has adopted the strategies of distributions and sales of its products primarily through various types and levels of provincial and municipal distributors and agents in Dalian, Heilongjiang, Harbin, Beijing, Guangzhou, Tianjin, Shenzhen, Jilin, Hebei, Liaoning, Shanxi, Hunan, Gansu and Shandong in China. The Company s major revenue breakdown by region in China for the 2010 fiscal year is as follows: As filed with the Securities and Exchange Commission on April 28, 2011 Registration No. 333- Sales( in U.S. Percentage in Region Dollars) Revenue Heilongjiang $ 9,866,031 27% Jilin $ 755,375 2% Shandong $ 1,291,733 4% Beijing $ 5,001,193 14% Guangdong $ 4,724,854 13% Liaoning $ 1,177,811 3% Shanxi $ 1,393,739 4% Hunan $ 1,762,199 5% Gansu $ 1,493,667 4% Other $ 8,562,948 24% Total $ 36,029,550 100% In addition to the network of regional distributors, the Company also uses other third party distributors who buy and resell our products to supermarkets, food and nutrition stores, department store counters, liquor boutiques, hotels, restaurants, and disco and karaoke bars. There are also consumer groups and individuals, such as schools, factories, community groups and government organizations, who buy our products directly from the Company for their own consumption in large volumes on a regular basis. Our principal executive offices are located at 99 Taibei Road, Limin Economic and Technological Development Zone, Harbin, Heilongjiang Province, People s Republic of China, and our telephone number at that address is 86-451-5735-1189. We maintain Internet websites at www.xrz.cn (Chinese language) and www.biocactus.com (English language). Information on our websites is not part of this prospectus.

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+PROSPECTUS SUMMARY The Offering Common Stock Being Offered By Selling Stockholders 11,728 shares of Common Stock. Initial Offering Price The initial offering price for shares of our Common Stock will be determined by prevailing prices established on the OTCBB or as negotiated in private transactions, or as otherwise described in Plan of Distribution. Terms of the Offering The Selling Stockholders will determine when and how they will sell the Common Stock offered in this prospectus. Termination of the Offering The offering will conclude upon the earliest of (i) such time as all of the Common Stock has been sold pursuant to the registration statement, (ii) one year or (iii) such time as all of the Common Stock become eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act of 1933, as amended (the Securities Act ), or any other rule of similar effect. Use of Proceeds We are not selling any shares of Common Stock in this offering and, as a result, will not receive any proceeds from this offering. Trading Symbol ICPC.OB

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+S-1/A 1 a2203993zs-1a.htm S-1/A Table of Contents As filed with the Securities and Exchange Commission on June 24, 2011 Registration No. 333-173042 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 TABLE OF CONTENTS Market and Industry Information ii Special Note Regarding Forward-Looking Statements ii Summary 1

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+PROSPECTUS SUMMARY You should read the entire prospectus carefully, including the risk factors beginning on page 6 and our financial statements and the notes thereto. Unless the context otherwise requires, all references in this prospectus to "the Company," "we," "our" and "us" refer to Iron Eagle Group, Inc., formerly known as Pinnacle Resources, Inc. and our wholly- owned subsidiaries, Sycamore Enterprises, LLC and Delta Mechanical Contractors, LLC. Unless the context otherwise requires, all references in this prospectus to "Iron Eagle" refers solely to Iron Eagle Group, Inc. Unless the context otherwise requires, the information contained in this prospectus gives effect to the January 21, 2011 acquisition of 100% of the members interest in Sycamore Enterprises LLC which, in turn, owns 100% of the member's interest in Delta Mechanical Contractors LLC. All references in this prospectus to Iron Eagle's outstanding shares of common stock and per share data gives effect to a one-for-eight reverse stock split of our common stock that we intend to consummate prior to completion of this offering. Our Company ----------- Through our DMC subsidiary, we provide construction and contracting services in both the infrastructure and government markets. DMC is a regional subcontractor providing commercial and industrial installation of plumbing, heating, ventilation and air conditioning and fire protection services in the regions of Rhode Island, Southeastern Massachusetts and Eastern Connecticut. We typically procure and install equipment to our customers design specifications. We provide contracting services for both new construction projects and the rehabilitation of existing infrastructure, commercial, and industrial facilities. Our services primarily consist of: - Plumbing and piping systems - Specialty, process piping & equipment - Heating Ventilation and Air Conditioning - Upgrades and repairs of HVAC equipment - Medical gas piping (e.g. Hospitals) - Laboratory service piping = Fire protection services - Specialty pump installation We service the following core commercial and industrial construction markets: - Military - Federal, State and Local Public Works = University/College = Pharmaceutical Facility - Manufacturing Facility - Medical - Office Building and Towers - Specialty Plants and Mills - Hotel/Motel - Distribution/Warehouse - Assisted Living - R&D and Laboratory - Retail/Entertainment/Recreational - Institutional Most of our work is performed on a fixed-price basis. Although we bear the risk of project cost overruns, we believe that we have the ability to seek to recover unforeseen additional costs through project change orders or claims. We had a backlog of anticipated revenue from the uncompleted portions of awarded contracts totaling approximately $31,000,000 as at March 31, 2011 and received contract awards of $3,200,000 from Electric Boat Company and the University of Rhode Island in the quarter ended March 31, 2011. Subsequent to March 31, 2011, we received contract awards and change orders for an additional $3,300,000. Our backlog as of December 31, 2010 was $39,500,000, compared to approximately $42,400,000 as of December 31, 2009. We believe that approximately $6,000,000 of our backlog as at March 31, 2011 is for work that is not anticipated to be completed in calendar 2011 and is expected to be reflected in 2012 revenues. The schedule for each project is different and subject to change due to circumstances beyond our control. Accordingly it is not reasonable to assume that performance of backlog will be evenly distributed throughout the course of a year. We believe that our backlog is firm notwithstanding provisions in our contracts allowing the customers to modify or cancel the contract at any time, subject in certain cases, to our receipt of cost reimbursement and cancellation fees. Our Strategy and Key Corporate Objectives ----------------------------------------- Our goal is to become a leading construction and contracting service provider to both the infrastructure and government markets throughout the United States. We believe that the highly-fragmented construction and contracting business for infrastructure and other public projects lends itself to such strategy. We intend to achieve this goal by implementing the following strategies: - Growth through acquisitions. We believe that there are a number of opportunities to acquire for a combination of cash, earn-outs and our securities, the assets or equity of a number of small and medium sized prime contractors and subcontractors to federal, state and municipal public projects as well as government sponsored institutions. Our acquisition model is to seek to acquire established and profitable well-managed companies with revenues of between $35.0 and $100.0 million at multiples of approximately 3.5 to 5.0 times their historical earnings before interest, taxes, depreciation and amortization, or EBITDA. - Internal growth opportunities. We believe that there are a number of revenue growth opportunities for DMC in its existing markets as work repairing and upgrading certain infrastructures, such as roads, bridge and schools in the New England market area require municipalities to make necessary expenditures. - Achieve a cost savings integration strategy. As we make strategic acquisitions, we intend to pursue a non-invasive cost- savings and integration strategy with easily-outsourced back- office functions being integrated at the corporate-level in order to achieve cost savings and to allow each of our operating subsidiaries to focus on their construction operations and not administrative tasks. - Highly experienced management team - We believe that our management team has the unique set of skills to effectively implement our growth strategy. Our management team has over 30 years of experience identifying, acquiring and managing regional, national and international construction companies which had revenues ranging from $20.0 million to $1.8 billion. In order to achieve our growth strategy, we will be required to raise additional capital through a combination of loans and equity financings. There is no assurance that such financing will be available or terms that will be acceptable to us. Recent Events ------------- On January 21, 2011, Iron Eagle acquired 100% of the member's interest of Sycamore and its DMC operating subsidiary from Bruce Bookbinder, the sole member of Sycamore. The total purchase price was paid by delivery of Iron Eagle's 5% $9.0 million note that was payable on or before June 2, 2011. Under the terms of our agreement, the note was subject to reduction on a dollar for-dollar basis if the working capital of Sycamore and its DMC subsidiary as at the January 21, 2011 closing date was less than $5.0 million. On May 18, 2011, we and Mr. Bookbinder agreed, based on the $4,675,463 closing date working capital of Sycamore, to reduce the principal amount of the note to $8,675,463 and on May 31, 2011 we agreed to extend its maturity date to September 2, 2011. The note is secured by 100% of the equity of DMC, which can revert to Mr. Bookbinder if the entire note, together with accrued interest thereon, is not paid in full by September 2, 2011. In addition, as per the purchase agreement for DMC executed on January 18, 2011, in the event that Sycamore and its DMC subsidiary achieve consolidated net income before interest, taxes, depreciation and amortization, or EBITDA in any one or more of the four fiscal years ending December 31, 2011 through December 31, 2014, we are obligated to pay Mr. Bookbinder future contingent payments based on the DMC results for such fiscal years 2014, with such contingent payments not to exceed $250,000 in any one of such four fiscal years or $1.0 million in the aggregate. We also agreed to employ Mr. Bookbinder as president of our DMC subsidiary for a period of four years through December 31, 2014. In connection with our May 31, 2011 agreement to extend the maturity date of the note to September 2, 2011, we agreed, following payment of such note, to either secure a full release to Mr. Bookbinder from his personal indemnity liability to Berkley Regional Insurance Company, a bonding company to DMC, or to provide an indemnity bond or other acceptable form of indemnity to Mr. Bookbinder. We are totally dependent upon receipt of the net proceeds from this offering to pay the principal and accrued interest on the note payable to Mr. Bookbinder. If only the 2,000,000 minimum number of shares are sold, the net proceeds we expect to receive will be only approximately $8.75 million, and we may be required to utilize approximately $192,000 of the existing cash balances of DMC in order to retire the purchase note, including accrued interest of approximately $266,000. As a result, DMC's bonding capability and our working capital may be adversely impacted. Our History ----------- Iron Eagle Group., was originally operated as a mining and exploration company, and was incorporated under the laws of Wyoming in January 1995 under the name of Pinnacle Resources, Inc. In March 2010, Pinnacle re- domiciled in Delaware and changed its name to Iron Eagle Group, Inc. We discontinued all mining and exploration activities as of April 2009. Iron Eagle entered into a share exchange agreement to acquire 100% of the outstanding common stock of Iron Eagle Group, Inc., a Nevada corporation. On August 18, 2010, Iron Eagle issued 9,337,296 shares of common stock (1,167,162 post reverse split) in exchange for a 100% equity interest in Iron Eagle-Nevada. As a result of the share exchange, Iron Eagle-Nevada became a wholly owned subsidiary of Iron Eagle and the shareholders of Iron Eagle-Nevada acquired a majority of the voting stock of Iron Eagle. As a result, the transaction was regarded as a reverse merger whereby Iron Eagle-Nevada was considered to be the accounting acquirer as its shareholders retained control of we after the exchange, although Iron Eagle is the legal parent company. For accounting purposes, the share exchange was treated as a recapitalization and Iron Eagle-Nevada and its historical financial statements is the continuing entity for financial reporting purposes. The financial statements have been prepared as if we had always been the reporting company and then, on the share exchange date, reorganized its capital stock. At the time of the exchange transaction, Iron Eagle had assets of approximately $830,065 and equity of approximately $49,967 and Iron Eagle-Nevada had assets of approximately $10,000 with a deficit of approximately $382,707. Available Information --------------------- Our website is www.ironeaglegroup.com. Our periodic reports and all amendments to those reports required to be filed or furnished pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 are available free of charge through our website. Our periodic reports on Form 10-K, 10-Q and our current reports on Form 8-K and any amendments to those documents to our website as soon as reasonably practicable after those reports are filed with or furnished to the Securities and Exchange Commission. Material contained on our website is not incorporated by reference in this prospectus. Securities offered A minimum of 2,000,000 and a maximum of 3,000,000 shares of our common stock. Terms of the Offering The underwriter and selling agents will be selling the common stock offered hereby on a "best efforts, 2,000,000 shares or none" basis during an offering period commencing on the date of this prospectus and ending on or before September 2, 2011, subject to extension only with the approval of the former owner of DMC, as the holder of our $8,675,463 purchase note. Pending the sale during the offering period of not less than 2,000,000 of the shares, all proceeds will be held in a special interest bearing escrow account at Signature Bank, New York, New York. In addition to our receipt of not less than $10,000,000 of gross proceeds, in order to complete this offering, Iron Eagle will be required to obtain approval from Nasdaq to list its shares on such stock exchange and retire the $8,941,669 note payable and accrued interest to the former owner of DMC. In the event that the offering is not completed for any reason, all proceeds will be returned to investors, together with accrued interest. Offering price $5.00 per share. Common stock 1,506,337 outstanding before this offering Common stock to be A minimum of 3,737,535 common shares and a outstanding after maximum of 4,727,535 common shares this offering(1) 4,737,535 common shares. Use of proceeds We plan to use the net proceeds of this offering to pay approximately $8,941,669 of principal and accrued interest on a purchase note issued in January 2011 in connection with the acquisition of DMC. To the extent that we sell more than 2,000,000 common shares, we will use the additional net proceeds to reduce certain accounts payable, and for working capital purposes to enable us to implement our acquisition strategy. If only the minimum 2,000,000 common shares are sold, the net proceeds we expect to receive will be only approximately $8,750,000, and we anticipate that we may be required to utilize approximately $192,000 of the existing cash balances of DMC in order to retire the purchase note. As a result DMC's bonding capability on future construction projects it bids for and our available working capital may be adversely impacted. Risk Factors An investment in our common shares involves a high degree of risk. You should carefully consider the Risk Factors beginning on page 20 of this prospectus before deciding to invest in Iron Eagle common shares. (1) Includes an aggregate of 243,095 restricted common shares issuable upon completion of this offering to certain executive officers of Iron Eagle, members of its board of directors and other stockholders or their affiliates in connection with their agreement to convert an aggregate of $972,374 of Iron Eagle notes and other accrued obligations outstanding at March 31, 2011 into common stock at a conversion price of $4.00 per share. The number of common shares to be outstanding after the closing of this offering excludes: - 24,219 shares issuable upon exercise of options outstanding and having a weighted average exercise price of $9.47 per share; - a maximum of 350,000 common shares issuable upon exercise of 50,000 Series A warrants at an exercise price of $4.00 per common share, and 50,000 Series B warrants at an exercise price of $4.00 per common share, and 250,000 Series C warrants at an exercise price of $0.08 per common share, issued in connection with a private placement of $200,000 of 13% notes due December 31, 2012 completed in August 2011, and - a minimum of 80,000 and a maximum of 120,000 shares issuable upon exercise of warrants issued to the underwriter and/or selling agents in this offering at an exercise price of $6.00 per share.